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THE LABOR MOVEMENT IN AMERICA, 

Price, $1.50. 



TAXATION IN AMERICAN STATES AND CITIES. 

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PROBLEMS OF TO-DAY. 

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SOCIAL ASPECTS OF CHRISTIANITY. 

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THOMAS Y. CROWELL & CO., Publishers, 



-^ 



TAXATION 



IN 



AMERICAN STATES AND CITIES, 



BY 

RICHARD T.'^ELY, Ph.D., 

Associate Professor of Political Economy in the Johns Hopkh s Uni= 

VERSiTY, Member of the Maryland Tax Commission, Member 

OF the International Statistical Institute, etc. 



ASSISTED BY 



JOHN H. FINLEY, A.B. 




NFW YORK: 
THOMAS Y. CROWELL & CO., 



v^"^ 





Copyright hy / 

Thomas Y. Crowell & Co. 
1888. 



TO 

mx. Herbert 38. ^tiatng, 

MY FRIEND AND COLLEAGUE, WITH WHOM MY ASSOCIATION 

FOR THE PAST SEVEN YEARS IN THE DEPARTMENT 

OF HISTORY AND POLITICAL SCIENCE IN THE 

JOHNS HOPKINS UNIVERSITY 

HAS BEEN 

HARMONIOUS, AGREEABLE, AND TO ME MOST ADVANTAGEOUS, 
AS A TOKEN OF ESTEEM AND APPRECIATIONo 



PREFACE. 



*' I ^HE present volume is not intended primarily for specialists, 
but for American citizens generally who are intelligent 
enough to appreciate the vast importance of the topic with which 
it deals. It is meant to be a popular work, but, it is hoped, in 
the better sense of the word. I have endeavored to keep the 
essential facts in mind, and to avoid all technical details which 
are not essential to an understanding of the main issues. 

The work is larger than I thought it would be as it is ; and 
had I written an exhaustive treatise, such as I would have tried to 
write had my book been designed primarily for lawyers or political 
economists, it would have been necessary to publish four or five 
volumes instead of one. The specialist will then understand 
why much has been omitted which he would gladly have seen 
inserted. Perhaps the general reader will obtain an idea of the 
largeness of the subject of taxation in states and cities, when 
told that the bill itself presented by the Maryland Tax Commis- 
sion to the legislature covered one hundred and twenty-one 
printed octavo pages. An adequate explanation of all parts of 
the bill would have required at least as many additional pages. 

A study of taxation is calculated to give one a rather pessi- 
mistic view of American laws, American institutions, and American 
character. As soon as one begins to examine the facts respect- 
ing taxes and tax-payers in our cities, one discovers that many 
an advocate of governmental reforms, loud in his professions, is 



viii PREFACE. 

as unscrupulous a tax-dodger as any unregenerate politician of 
the " spoils " school ; that many a man who plumes himself on 
the soundness of his Christianity, is but too ready to browbeat 
the tax-assessor and shift his just burden to the shoulders of 
the weak and defenceless ; that many a one who figures in the 
lists of donors to charitable and philanthropic institutions, gives, 
after all, only a part of what he has withheld from the public 
treasury. On the other hand, it is encouraging to find rare 
instances of men of wealth who do not avail themselves of the 
means at their command to evade taxes, and who bear heavy 
burdens placed upon them by an antiquated and iniquitous sys- 
tem of taxation. 

It would also be difficult for me to take too sombre a view of 
human nature, for in the preparation of this work I have been the 
recipient of so many kindnesses from so many people in every 
part of the United States, that I find myself embarrassed to know 
how to express my gratitude. Should I print simply a list of 
names of those who have aided me in one way and another, it 
would require two or three pages. I must thank the different 
officials of states and cities who have often, at no inconsiderable 
inconvenience to themselves, supplied me with public documents 
and written information on numerous points of the various sys- 
tems of taxation with which they are concerned. It seems 
ungrateful not to mention them by name, but there are so many 
of them that it is impossible to do this. 

Professor J. B. Clark, of Smith College, Northampton, Mass. ; 
Professor E. R. A. Seligman, of Columbia College, N.Y. ; 
Professor Arthur Yager, of Georgetown, Ky. ; Professor 
Edward W. Bemis, of Vanderbilt University; Hon. P. Bliss, of 
Missouri ; Hon. Seymour Dexter, of Elmira, N.Y, ; Hon. 
James Alfred Pearce, of Kent County, Md. ; Mr. J. R. 



PREFACE. ix 

Lamar, of Augusta, Ga. ; Mr. Stuart Wood, of Philadelphia ; 
Mr. Francis T. King, of Baltimore; Hon. T. M. Cooley, of The 
Interstate Commerce Commission; my father, Mr. E. S. Ely, 
of Fredonia, N.Y. ; Mr. W. B. Hill, of Macon, Ga. ; Hon. Lewis 
Hopkins, of Baltimore ; Professor George W. Knight, of the 
State University of Ohio ; Professor Henry C. Adams, of the 
University of Michigan; and Colonel William P. Craighill, of 
Baltimore, have written me valuable and suggestive letters on 
some aspects of state or local finance. It is scarcely necessary 
to say that not one of these gentlemen is to be regarded as in 
any way responsible for the views I have expressed in this work. 

I am indebted to Mr. Joseph A. Hill, graduate student of Har- 
vard University, for the loan of a manuscript essay on " Taxation 
in States and Cities " ; to Professor Arthur Yager for the loan of 
a manuscript essay on "Taxation in Kentucky"; to Mr. Henry 
B. Gardner, graduate student of the Johns Hopkins University, 
for the loan of his manuscript essay on "Taxation in Rhode 
Island" ; and to rny colleague, Professor George H. Emmott, for 
reading parts of this work, and discussing with me some of the 
legal aspects of taxation. 

A considerable part of one chapter in this book appeared as 
an article in the Baltimore Sun^ in my series, entitled, " Problems 
of To-Day." I must also make acknowledgment to the Sicn for 
a few other extracts from the same series. 

Finally, I desire to acknowledge the aid I have received in 
various w^ays from Mr. John P. Poe and Mr. Charles M. Arm- 
strong, with whom I was associated both on the Baltimore City 
Tax Commission and the Marj'land State Tax Commission ; to 
Mr. Summerfield Baldwin, of the City Commission; and to Mr. 
James Alfred Pearce, of the State Commission. 

I have omitted the names of many to whom I am indebted for 



X PREFACE. 

kindnesses which I sincerely appreciate. I must mention the very 
special aid I have received from Mr. John H. Finley, graduate 
student of the Johns Hopkins University, who for many weeks 
has devoted his entire time to this book, and has assisted me 
with extraordinary dihgence and a display of unusual ability. 
Whatever merits this book may possess are due to no small 
extent to Mr. Finley, and it has seemed to me only proper to 
place his name on the title page. 

It is extremely difficult to obtain the material needed for ade- 
quate presentation of the finances of all our states and cities. I 
hope in a future edition, should one be called for, to give a more 
nearly perfect account of the facts respecting the revenues of 
American states and cities, past and present, and I ask that all 
readers who have it in their power to assist me to complete my 
collection of official documents, will have the kindness to do so. 
I want reports of auditors and treasurers of states and cities, 
reports of tax commissions, governors' and mayors' messages ; 
and, in short, all financial documents which I can secure. There 
are many such reports stored away in old garrets and out-of-the- 
way places, of no possible value to their present owners, which 
would be of yse to me. The older reports are more difficult to 
obtain, and are on that account more valuable ; but my collection 
of even recent documents is imperfect. I trust that I shall re- 
ceive further assistance firom members of legislatures and officials 
of states and cities. 

Instruction in sewing and cooking has been introduced in 
some of our schools, and the results have been most satis- 
factory. I venture to express the hope that at least a few 
schools and colleges will use this work as a text-book on taxa- 
tion, for the subject is of vital importance to all American 
citizens. The difference between a good system of taxation and 



PREFACE. xi 

a poor one is to many of our fellow-citizens precisely the differ- 
ence between having cloth to make into garments and going 
naked; the difference between having food to cook and going 
hungry. 

RICHARD T. ELY. 

Johns Hopkins University, 

Baltimore, Md., April 14, 1888. 



TABLE OF CONTENTS, 



Part I. 

INTRODUCTION. 

PAGE 

Chapter I. — Taxes Defined 3 

Chapter II. — General Propositions respecting Taxes. 

Taxes are not payments in exchange 13 

Taxes are not debts 18 

The power to impose taxes is legislative 19 

Taxes are regular and orderly contributions .... 22 
What is called a tax in one place is not always called a tax in 

another 23 

The power of taxation cannot be delegated .... 23 

Chapter III. — The Origin and Growth of Modern Taxa- 
tion. 

Taxation as we understand it a new thing 25 

The revenues of the state in the Middle Ages .... 30 

Taxes long hold a subordinate position in budgets of states . 35 

Taxes first paid only by the weak and defenceless ... 42 

The early American views of taxation 44 

Other sources of revenue at the present time. — Comparative 

statement 47 

Chapter IV. — A Few General Remarks on the Workings 
of Taxation. 

Taxes often yield larger returns than ordinary expenditures . 55 

The tendencies of taxation are various 57 

Taxation and liberty ......... 58 

Taxation and social reform 62 



XIV TABLE OF CONTENTS. 

CIL4.PTER v.— The Different Kinds of Taxes. 
Qassification of taxes has become important 
The classification of the Physiocrats 
Other classifications ...... 

Administrative classification of taxes 

Other modes of classification .... 



63 
63 
64 
76 
77 



Chapter VI. — Direct and Indirect Taxation Compared. 

Indirect taxes are chiefly taxes on commodities ... 79 

Indirect taxes violate the principle of equality .... 80 

Indirect taxation and pauperism ...... 82 

Indirect taxes obstruct trade ....... 83 

Indirect taxes and monopoly 83 

Indirect taxes congenial to despotism and aristocracy ... 85 

Direct taxes promote good citizenship 87 

A judicious combination of direct and indirect taxes desirable 
Comparison of the cost of raising revenues by direct and indirect 

taxation 90 

Chapter VII. — The Literature of Taxation. 

Paucity of the literature of taxation ...... 94 

Reports of tax commissions 94 

Treatises on political economy and finance .... 95 

Special treatises .......... 98 

Other sources of information loi 



Part II. 

TAXATION AS IT IS. 

Chapter I. — Colonial Taxation. 

Introductory remark 105 

The colonies insist upon the right to vote the taxes . . . 106 

Rhode Island 107 



TABLE OF CONTENTS. XV 

PAGE 

Voluntary contributions early replaced by taxes . . . 109 

Taxes on property and polls . . . . . . . 109 

Quit-rents 112 

Fees 112 

Other taxes 113 

Lotteries 113 

Duties 114 

Chapter II. — Taxation in ijgb . . . . . Il6 

The objects and principles of taxation in 1796 . . . • "7 

Taxes on land .......... 119 

Other peculiarities in the various tax systems . . . .120 

Apportionment and collection of taxes 123 

Assessment of taxes 124 

Collection of taxes . 128 

Compensation of assessors and collectors 130 

Chapter III. — T/ie Transition Period. 

General remarks 131 

Connecticut 133 

Ohio 134 

Other states 137 

Reason for the taxation of all property at one uniform rate . 139 

Dissatisfaction early manifested ....... 141 

The nature of the difficulty . . . . . . * . 143 

The testimony of experience 145 

Chapter IV. — Experience of Ohio. 

Constitutional provisions 146 

Real estate ........... 148 

The taxation of personal property in Ohio . , . . 152 

Chapter V. — Experience of Georgia . . ... 160 

City and town property . . . . . . . .164 

Notes, accounts, bonds, merchandise 164 



XVI TABLE OF CONTENTS. 

PAGE 

Chapter VI. — Experience of Wisconsin and West Vir- 
ginia. 

Wisconsin 170 

Taxation of railroads . . . . . . . 1 70 

The general property tax . . . . . . .172 

West Virginia .......... 173 

Those evading taxes are generally best able to pay them . 173 

Chapter VII. — Experience of New York . . . 176 

Who pays taxes on personal , . . . . ; • 177 

Boards of equalization in New York State . . . , 184 

Chapter VIII. — Experience of Other States. 

New Hampshire . . . . . . . . . ,188 

Connecticut 188 

Maryland 189 

Illinois 192 

Dr. Patten's Essay 192 

The Report of the Revenue Commission of 1886 . . 197 

Chapter IX. — Other Features of Existing Financial Sys- 
tems. 

Introductory 202 

Ordinary business licenses and occupation taxes . . . 203 

Poll taxes 209 

Special assessments . . 212 

Other sources of revenue 213 

Chapter X. — The Testimony of Reason. 

States not independent in matters of taxation .... 217 
Returns on property of a high degree of mobility dependent on 

general conditions . 218 

Interference of the federal government in matters concerning 

local taxation ......... 225 

Our existing methods of taxation needlessly demoralizing . . 229 



TABLE OF CONTENTS. xvii 

Part III. 

TAXATION AS IT SHOULD BE. 

PAGE 

Chapter I. — The Principles on which a New System of 

Taxation should be Based 237 

Chapter II. — Taxation on Real Estate . . . . 246 

Chapter III. — Exemption of Real Estate from State 
Taxation. 

Administrative reasons for this exemption 251 

A further reason for separating the sources of state revenue from 

the sources of local revenue 253 

Chapter IV. — A Plan whereby a Part of the Increasing 
Value of Real Estate in States and Cities may be Se- 
cured to the Public 264 

Chapter V. — Natural Monopolies. 

Natural monopolies defined and characterized .... 269 

Profitableness of natural monopolies 270 

Recommendations 271 

Chapter VI. — Taxation of the Manufacture and Sale of 
Intoxicating Liquors. 

Modified prohibition 280 

High licenses 283 

Chapter VII. — Taxation of Incomes. 

The position of an income tax in a system of taxes . . . 287 

An income tax will promote good government . . . 289 

Current opinion against an income tax 290 

Income tax and personal property tax contrasted . . . 294 

An income tax must be a state tax . . . . . . 296 

Assessment of an income tax 297 



xviii TABLE OF CONTENTS. 

_ PAGE 

Sufficiency of a low income tax 300 

The income taxes in American states ..... 302 

Pennsylvania levies an income tax on special kinds of income . 302 

All incomes above a moderate exemption should be taxed . 303 

Progressive versus proportional taxation 305 

Chapter VIII. — Taxation of Inheritances and Bequests . 312 

Chapter IX. — Btisiness Tax 321 

Chapter X. — Taxation of Railroads Operated by Steam 
and Other Corporations. 

Railroads 324 

Corporations 328 

Chapter XI, — Miscellaneotis Kinds of Personal Property. 

Taxation of household goods 334 

Exemption of certain kinds of personal property . . . 335' 

Diffusion of the benefits of exemption ..... 338 

Chapter XII, — Taxation of Savings Banks, Churches, 
and Educatiojial and Benevolent Institutions. 

Savings Banks 340 

Church buildings . 344 

Educational and benevolent institutions . . . ' . 345 

Chapter XIII. — Technical Details and Administrative 

Machinery ........ 350 

Oaths 352 

Money to be raised for the coming year ..... 353 

Discounts for the prompt payment of taxes 354 

Counties 3^0 

City assessors 3^5 

Valuation of real and leasehold property in Baltimore City . 367 

Appeals 369 

Conclusion 37^ 



TABLE OF CONTENTS, XIX 



Part IV. 

CONSTITUTIONAL PROVISIONS, STATISTICAL INFORMATION, 
AND MISCELLANEOUS MATTER. 

PAGE 

I. Constitutional Provisions. 

1. General remarks ....... 37c 

2. Tabular statement opp. 396 

3. Additional provisions 397 

II. Revenues and Expenditures of the States. 

1. Comments 407 

2. Revenues and expenditures of each state . . . 408 

3. Statistical table of revenues and expenditures . opp. 452 

4. Table showing receipts, expenditures, etc., of the 

territories ......... 454 

5. Taxation in Ohio 455 

6. Taxation in New York . . . . . . .457 

7. Revenues of North Carolina 458 

8. Royalty from phosphate rock in South Carolina, by C. 

Meriwether, A. B. . . . . . . . 4^9 

9. Onondaga Salt Springs of New York .... 466 

III. Revenues and Expenditures of Cities. 

1. Budgets of Baltimore, Boston, Chicago, New York, 

Philadelphia, and Atlanta 469 

2. Comparative table of receipts and expenditures of the 

cities named 478 

3. Statistical tables of valuation of property, taxation, etc., 

in Baltimore, Boston, Chicago, Cincinnati, New York, 
Philadelphia, and Providence .... 480 

IV. Rates of Taxation. 

1. Table showing rates of taxation in the states . . 496 

2. Table showing rates of taxation in New York from 1816- 

1S87 497 

V. Valuations of Real and Personal Property. 

1, Table from census report of 1880 .... 498 

2. Table from census report of 1880 .... 499 



XX TABLE OF CONTENTS. 

PAGE 

3. Valuations in the states in 1887 compared wdth 1880 . 500 

4. Connecticut grand list 503 

5. Valuation of property in Charleston .... 507 

VI. Public Debts of States and Cities. 

1. Constitutional provisions 508 

2. Additional constitutional provisions . . . . 510 

3. Statistical table 513 

VII. Inheritance and Bequests. 

1. Comments on proposal to change statutes of descent 

and wills in Illinois . , . . . . • 5^5 

2. Bill introduced in the Illinois legislature to reform 

statutes of descent and wills 519 

3. New York laws in regard to collateral inheritances and 

bequests 523 



PART I. 

INTRODUCTION. 



PART I. 

INTRODUCTION, 
CHAPTER I. 

TAXES DEFINED. 

THE preparation of a book on taxation at once suggests 
the question : What are taxes ? While most men 
have a sufficiently clear conception of a tax to recognize 
one in the concrete, it will be found by those who try, a 
most difficult thing to frame such a definition of taxes as 
to include everything which may properly be called a tax, 
and exclude everything which cannot properly be called a 
tax. Many definitions have been given to the public by dif- 
ferent writers on finance, but no one of them, it seems to 
me, is accurate in every particular. I will quote a few of the 
most noteworthy definitions of taxes, and after criticising 
them briefly, will present one of my own.^ 

Professor Knies of the University of Heidelberg defines 
taxes in these words : " Taxes are the legally determined 
and legally collected contributions of individuals for meeting 
the necessary and general expenses of the state." This 

1 Other words are used to denote taxes or a particular kind of taxes, 
as for example, imposts, customs duties, and excise duties, which are 
usually called internal revenue taxes in the United States. The French 
use the word impots for taxes, and the Germans, Steuern. 



4 INTR OD UC TION. 

definition may be said to tell us what taxes ought to be, 
rather than what taxes are. As a matter of fact we find 
taxes frequently levied not for the necessary expenses of 
government, but to provide the means for extravagant and 
useless or worse than useless expenditures, while they are 
too often laid upon the people not for the sake of the gen- 
eral welfare, but to subserve some private end. When we 
examine the institutions and the public life of countries hke 
Turkey and Russia, we at once discover a wide divergence 
between the actual practice with respect to taxation and the 
requirements of the definition given by Knies.^ 

Judge Cooley, in his work on "Taxation," defines taxes 
" as being the enforced proportional contribution of persons 
and property levied by the authority of the state for the 
support of government and for all public needs." On the 
one hand, this definition fails to include with desirable 
precision some ideas which may properly be embraced in a 
definition of taxes, and on the other, it does not appear 
to be quite accurate. Taxes are not always levied even pro- 
fessedly for public needs, unless we go so far as to claim 
that every contribution from the public treasury is for a pub- 
lic purpose, simply because it has been sanctioned by public 
authority. Constitutions at times even make provision for 
expenditures in order to meet some private need. Section 
9 of Article I. of the constitution of New York provides 
that "the assent of two-thirds of the members elected to 
each branch of the legislature shall be requisite to every bill 
appropriating the public moneys or property for local or pri- 
vate purposes." The constitution of Rhode Island, in sec- 
tion 14 of Article IV., contains the same provision. 

1 It is proper to say that this definition is taken from the notes on the 
lectures by Professor Knies which I made while a student in Heidel- 
berg. 



TAXES DEFINED. 5 

A remarkable instance of a tax imposed for private pur- 
poses is afforded by the history of Maryland. Luther Martin, 
" the Federal Bull-Dog," was much esteemed by the bar of 
Maryland, and when he was rendered dependent upon his 
friends in 1820 by a stroke of paralysis, a great deal of sym- 
pathy was aroused for him. This led in 1822 to the passage 
of an act by the legislature, requiring every lawyer in the 
state to pay an annual license fee of five dollars to trustees 
for the use of Luther Martin.^ 

Paul Leroy-Beaulieu, in his "Traite de la Science des 
Finances," in one place defines taxes in these words : 
"Taxes are simply contributions demanded of citizens as 
their share of the expenses of government," "- and on the 
following page he gives this somewhat more amplified defini- 
tion : " Every contribution regularly demanded of the citizens 
by the constituted authorities of the land for meeting the 
expenses of government, is a tax." The objections to these 
definitions by Leroy-Beaulieu are similar to those given above, 
and it may be said that they positively exclude some purposes 
for which taxes are levied which might possibly be included 
under Judge Cooley's definition. Taxes are levied for other 
purposes than the support of government. They are laid to 
encourage people to do certain things, and also to dissuade 
them from doing certain things.^ Taxes on imports are, for 
example, often designed to encourage people to manufacture 

1 See "Luther Martin, the Federal Bull-Dog," by Henry P. God- 
dard, page 28, "Maryland Historical Society Papers," Baltimore, 1887. 

2 Volume I., page 104, of second edition. 

^ The INIaryland constitution expressly grants to the legislature the 
power to levy taxes for the promotion of the general welfare. A part 
of Article XV. of the Declaration of Rights contains these words : 
" Fines, duties or taxes may properly and justly be imposed or laid with 
a political view, for the good government and benefit of the community." 



6 INTR OD UC TION. 

commodities, while the revenue is regarded as something 
merely incidental.^ 

The high licenses, which in Illinois, Pennsylvania, Minne- 
sota, and elsewhere are exacted of dealers in intoxicating 
liquors, profess to have in view the discouragement of the 
liquor traffic. These licenses may yield large revenues, but 
the advocates of this sort of taxation claim that the benefits 
which accrue to the public treasury are something merely 
incidental, while the main object is to diminish the number 
of drinking-saloons, and thus to lessen the curse of intemper- 
ance. A tax of ten per cent, is laid by federal laAV on all 
bank notes issued by any other banking associations than 
those organized under federal law and known as national 
banks. As this tax more than equals any benefit which could 
accrue to any one from the issue of bank notes, it has com- 
pletely suppressed the issues of state banks, and was designed 
to accomplish this. It has been decided by our courts that 
the right of taxation includes the right to destroy value. Chief 
Justice Marshall says " the power to tax involves the power 
to destroy," and "if the right to tax exists, it is a right which 
in its nature acknowledges no limits."^ 

The following definition, upon which I have spent consid- 
erable thought, appears to me to contain an accurate descrip- 
tion of taxes : — 

Taxes are siiiiply one-sided transfers of economic goods 

1 Clay favored in 1816 "a thorough and decided protection to home 
manufactures by ample duties," and Mr. Ingham, in supporting him, 
said : " The revenue was only an incidental consideration and ought 
not to have any influence in the decision upon the proposition before 
the committee." See "Taxation in the United States, 1 789-1816," by 
Henry Carter Adams, Ph.D., page 35, Johns Hopkins University Studies 
in Historical and Political Science, Volume II., Nos. Y.-VI. 

2 See Cooley's "Taxation," foot-note 2, pages 10 and 11. 



TAXES DEFINED. 7 

or sej'vices demanded of the citizens, and occasionally of those 
fiot citizens, but who, nevertheless, are within the reach of 
the taxing power, by the constituted authorities of the laiid, 
for meeting the expenses of government, or for some other 
purpose, with the intention that a common burden shall be 
maintained by common contributions or sacrifices. 

Several points in this definition require comment. Taxes 
are described as one-sided transfers. The element of reci- 
procity is excluded. Taxes are not an exchange, nor are 
they a payment. The sovereign power demands contribu- 
tions from citizens regardless of the value of any services 
which it may perform for the citizen. This is a clear aban- 
donment of the old legal fiction that taxes are paid for pro- 
tection/ — so palpable an absurdity that it is strange that 
it could ever have gained the currency which it even now 
enjoys. It is probable that the ancient fiction is maintained 
because our jurists have so generally failed to give proper 
attention to economics, and have never grasped the funda- 
mental principles of taxation. Something must be said, and 
knowing nothing better, it is still repeated, " taxes are pay- 
ment for protection," although the law itself refuses to recog- 
nize in taxation any of the principles which apply to purchase 
and sale, and contracts and debts resulting therefrom. More 
will be said hereafter about the reason why taxes are paid.^ 

Taxes are transfers of economic goods or things which 

1 This idea is implied in Montesquieu's definition of taxes : " The 
public revenues are a portion which each subject gives of his property 
in order to secure and enjoy the remainder." " Esprit des Lois," XIII. 7. 

2 No one is admitted to the bar in France and Prussia who has not 
studied political economy. Our best law schools are beginning to in- 
troduce courses in political, social, and economic science; and the 
ancient fiction in question will, it is to be hoped, ere long be laid to 
rest with the contract theory of the origin of the state. 



8 INTR OD UC TION. 

have value. Taxes are generally paid in money, but not 
necessarily. Formerly it was common in the American 
colonies to receive commodities in payment of taxes. 
When taxes were paid '4n kind," much was said about the 
lean kine used for this purpose in New England. Rhode 
Island prescribed certain rates at w^iich various commodities 
should be received by the public treasury for taxes ; and it 
is probable that careful research would discover similar legis- 
lation in every one of the original thirteen colonies.-^ 

Taxes for certain purposes are still paid in labor in many 
of our states. These are chiefly taxes for construction, 
maintenance, and improvement of roads in country districts. 
These taxes are ''worked out," as the phrase is. They are 
like the old French corvees, w^hich were one of the abuses 
of the ancien regune, and are a partial explanation of the 
abominable roads at the present time in most parts of the 
United States. "Road duty" in cities is usually replaced by 
a general tax, but in the city of Atlanta, Ga., those who fail 
or refuse to pay this and other taxes in money are obliged 
to work on the streets at the rate of thirty-five cents a day 
until their taxes are thus paid.^ 

Taxes are demanded of citizens usually, but foreign resi- 
dents are after a period generally treated like citizens wdth 
respect to most taxes. Non-resident foreigners are taxed 
when they own property in the country laying the tax. This 
is always the case with real estate, and sometimes with per- 
sonal property. The tax on real estate is a tax on things. 
It is like a first charge on its revenues, and is raised regard- 

1 The treasurer of New Haven, for example, was authorized to receive 
Indian corn at 2s. /[d. per bushel in payment of town taxes or rates. 
See Levermore's " Republic of New Haven," Baltimore, 1886, page 74. 

2 The tax in Atlanta is ^3.50, and all males between the ages of 
sixteen and fifty are subject to this tax; truly a "grievous and op- 
pressive " burden. 



TAXES DEFINED. 9 

less of ownership. It often practically amounts to partial 
public ownership in the property. The English income tax 
on shares in corporations, stocks and bonds, is collected 
from corporations and from banks paying interest or divi- 
dends,^ and takes no account of the fact that the owner of 
the stocks and bonds may be a non-resident foreigner. 

It is expressly provided in most of our states in which a 
poll tax exists that aliens are subject to it, and the comp- 
troller-general of Georgia in his book of " Instructions " spe- 
cially calls the attention of tax-receivers to the fact that 
aliens are liable for the poll tax. 

Taxes on foreigners are justified on the ground that they 
must derive some benefit from the existence of the govern- 
ment taxing them, and in so far such taxes may be regarded 
as a payment for protection, for it cannot be held that the 
duties of citizenship devolve upon foreigners. It may also 
be urged that if foreigners are taxed by our government, our 
citizens will probably be taxed by foreign governments, and 
that the sum which we collect from foreigners will approxi- 
mately equal the sum that foreign governments collect from 
our citizens. A rough kind of justice, about as accurate as 
can be attained in matters of taxation, is thus effected. 

The element of might also undoubtedly enters into taxa- 
tion, and the mere fact that a foreigner is so situated that he 
can be forced to contribute to the expenses of government 
is at times held to be sufficient reason for placing a tax upon 
him.2 

1 Coupons are generally made payable at some bank, and when any 
English bank pays them, it must deduct the income tax and pay it to 
the government. 

2 It may be further urged that a man owes certain duties to humanity, 
and if he fails to discharge the offices of citizenship at home, it is 
ethically allowable for a foreign government, which can lay its hands on 
him, to force him to do his part towards the support of government. 



10 INTR OD UC TION. 

A burden is sustained by common sacrifices, and by com- 
mon is meant according to some fixed rule, applicable to a 
class of persons or a class of property, but not necessarily to 
all persons, still less to all property. Certain persons may not 
individually and without the application of any common rule 
be selected for the maintenance of government, or to bear a 
public burden. This would be confiscation and not taxation, 
and in the United States would be prohibited by that provis- 
ion of our federal constitution which provides that private 
property must not be taken for pubHc use without adequate 
compensation. The constitution of Illinois provides in Art- 
icle IX., section i, that the general assembly shall have power 
to tax pedlers, auctioneers, brokers, hawkers> merchants, 
commission-merchants, and other persons enumerated, as 
well as toll-bridges, ferries, insurance, telegraph and express 
interests, and persons or corporations owning or using fran- 
chises and privileges, in such manner as it shall direct by 
general law, but the tax must be " uniform as to the class 
upon which it operates."^ State constitutions often prescribe 
what kind of taxes shall be levied, or how they shall be 
levied. Thus Article XV. of the Declaration of Rights of 
Maryland provides that every person in the state, or holding 
property therein, " ought to contribute his proportion of pub- 
lic taxes for the support of government, according to his 
actual worth in real or personal property." It is held that 
this would prevent an exemption of certain classes of per- 
sonal property from taxation, although the principles of 
taxation would sanction such an exemption. 

1 In St. Mary's County, in Maryland, a tax was once laid upon all 
lawyers within the county for the repair of the court-house. This is a 
curious instance of a tax laid upon all members of class. It was evi- 
dently supposed that lawyers derived a peculiar advantage from the 
existence of court-houses, and accordingly thought fair that they should 
make a special contribution for their maintenance. 



TAXES DEFINED. 11 

Judge Cooley, in his work on "Taxation,"^ gives a decision 
of the Court of Appeals of Kentucky, which held a law un- 
constitutional because it required a portion of one street in a 
city to be improved in an exceptionally expensive manner, at 
the cost of abutting property owners, and that without their 
consent, whereas the law required a petition from property 
owners in other portions of the city, before street improve- 
ments could be ordered. The following is an extract from 
the opinion of the court : " A law imposing taxation on the 
general public, the evident intent and legitimate results of 
which are to equalize the burden so far as practicable, will 
not be held as violative of the fundamental law merely be- 
cause that desirable end may not be attained. But when, as 
in this case, the most probable, if not the necessary, conse- 
quence of the law is to produce the most oppressive inequal- 
ity, and to compel a small minority of tax-payers to provide 
at their sole expense, an improvement of general utility and 
public interest, the construction of which costs more than 
double as much as the character of such improvements in 
general use, and from which, when constructed, the general 
public derives almost as much advantage as themselves, it 
assumes the character of an attempted exercise of arbitrary 
power over the property of this minority ; it becomes, in a 
constitutional sense, a taking and appropriation of their pri- 
vate property to the pubhc use without compensation." 

This decision harmonizes with the conception of the defi- 
nition. When common burdens are placed upon the citi- 
zens, these may be called taxes ; but when a portion only 
of the community are, without good and sufficient reason 
but by arbitrary exercise of power, separated from their fel- 
low-citizens and commanded to bear public burdens, it can 
be regarded only as confiscation. Good and sufficient reason 
1 Page 489. 



12 INTR OD UC TION. 

for taxing all property of a class, and not all classes of prop- 
erty, may be found in the principles of taxation. Real estate 
owners cannot claim that their property is confiscated because 
they are taxed while owners of such personal property as 
mortgages and promissory notes are not taxed on their prop- 
erty, for the reason that the ground of exemption is public 
policy. It is held that the benefits of this exemption are 
diffused. Similarly, dealers in the commodity, sugar, could 
not enter a plea that a tax laid on sugar and not on all com- 
modities was confiscation, since the manifest intention of a 
legislature in laying such a tax law must be to provide for 
a common burden by common sacrifices, for it holds that 
the tax will be shifted by dealers, and thus diffused through- 
out the community. Where a small income, like ^600, is ex- 
empted from a general income tax, those who pay an income 
tax have no ground for complaint, because indirect taxes, 
which probably comprise the major portion of taxes in all 
civilized countries, bear more heavily on the poorer classes 
than on the rich and well-to-do, and because there are fur- 
ther technical reasons for this exemption found in the ad- 
ministrative machinery of government, since the expense of 
collecting an income tax from those whose incomes are small 
is excessive, taking far more from the pockets of the tax- 
payers than ever reaches the public treasury. More may be 
said on this point, and the foregoing is simply by way of 
illustration. Taxes must appeal to the conscience of the 
community as fair and equitable,^ for the moral sense of the 
community has always had, and doubtless always will have, 
great weight in judicial decisions touching taxation as well 
as other matters. 

1 The constitution of Massachusetts pro\4des that assessments, rates, 
and taxes shall be " proportional and reasonable." Constitution, Part 
II., Chapter I. § i, Article IV. 



CHAPTER II. 

GENERAL PROPOSITIONS RESPECTING TAXES. 

TAXES ARE NOT PAYMENTS IN EXCHANGE. 

IT is well to Specify some things which taxes are not, in 
order to bring out more clearly what they really are, and 
first of all, I will elaborate further the idea of which men- 
tion has already been made, that taxes are not one part of an 
exchange of services. 

This has been imphed in the definition. They are 
one-sided transfers of goods or services, and are not mu- 
tual. The citizen pays because he is a citizen, and it is 
his duty as a citizen to do so. It is one of the conse- 
quences which flow from the fact that he is a member of or- 
ganized society. Man, as a human being, owes services to 
his fellows, and one of the first of these is to support govern- 
ment, which makes civilization possible. Only an anarchist 
can take any other view. To the ordinary man it appears 
right that he should be called upon to give not only his 
property for the promotion of common interests, but even 
his life, if need be. He asks only that it shall be by some 
common rule. While the citizen and all human beings de- 
rive benefits from the existence of government, these bene- 
fits come to them as citizens and as human beings. A 
failure to pay taxes never works a forfeiture of the common 
rights of citizens, and the pauper who receives from the 
community instead of paying to it, has inahenable rights as 
well as the millionnaire, and under certain circumstances all 



14 INTRODUCTION. 

the expensive machinery of government will be placed at his 
disposal. Nor can I even urge that I have not received 
protection, as a plea for non-payment of taxes. The police 
and the fire department may both have failed to protect my 
person and my property as they should have done, but that 
fact will not be regarded as a justification for a deduction 
from the annual tax on my house. ^ Nor yet can I go before 
the courts and urge that as I require no protection from the 
state, I should be relieved from taxation. I am not allowed 
to undertake to protect my own person in lieu of the pay- 
ment of taxes.^ 

Judge Cooley, after making a concession to the old fiction 
of reciprocity in taxation, adds as a justification of taxation, 
" the exclusive sovereignty and jurisdiction of the state over 
the persons and property within its territory," ^ evidently 
feeling the insufficiency of such justification as is " found in 
the reciprocal duties of protection and support." As I 

1 A recent writer well says that the laws of insurance and contract 
do not apply to taxes. When my house burns down or a thief robs me, 
I am not indemnified out of the public treasury. 

2 The correct 'doctrine of taxation is ably stated in the " Report of the 
Massachusetts Commissioners relating to Taxation" made in 1875. "-^ 
man is taxed," says this Report, " not to pay the state for its expense in 
protecting him, and not in any respect as a recompense to the state for 
any service in his behalf, but because his original relations to society 
require it. All the enjoyments which a man can receive from his 
property come from his connection with society. Cut off from all 
social relations a man's wealth would be useless to him. In fact, there 
could be no such thing as wealth without society. Wealth is what 
may be exchanged, and requires for its very existence a community of 
persons with reciprocal wants. ... It is wise and right, therefore, for 
an individual to contribute of his wealth what the true interests of 
society require, and this he does, not as a payment for the gifts which 
society has conferred." (Page lO.) 

3 "Taxation," page 2. 



GENERAL PROPOSITIONS RESPECTING TAXES. 15 

take it, from a purely legal view, the fact of sovereignty may 
be regarded as sufficient justification, and the attempt to add 
to that leads to confusion of thought. 

The ethical view has a larger scope. The duties to one's 
fellows, frequently imposed by law, are perhaps alone suffi- 
cient ethical justification. More may, however, be said. 
The general public through the agencies of organized gov- 
ernment is a partner in production, and is in this capacity 
entitled to a share of all that is produced.^ If any one doubts 
that, let him put to himself the question. How great would 
be the production of wealth, did no government exist? 

Now if government is an indispensable condition of produc- 
tion, it is as truly a factor of production as any natural agent 
or as labor, and is as truly entitled to a share of wealth. What 
this share shall be, however, is determined by its own sover- 
eignty, and not by principles of private exchange. Still 
further, society, of which one manifestation is government, 
is present in all production. No such thing as strictly indi- 
vidual production of wealth exists in any modern community. 
How much can be produced on a strictly individual basis 
can be ascertained by one who will isolate himself in the 
heart of Africa, or on the plains of South America, or even 
in our own fertile West, and have no dealings whatever with 
others. All modern production is truly social, and the de- 
pendence of the individual is felt in a thousand and one 
ways. Where a division of labor obtains, and we produce 
for others, we are dependent upon these others. If they fail 
to produce, we receive nothing in exchange. The activity 
of our competitors in production is also of vital importance, 
as is the competition of those who desire to obtain the things 

1 A recent pamphlet on taxation, by Mr, C. M. Armstrong, of Balti- 
more, bears the title of *' The Guaranteed Partner of the Tax-Payer,' 
meaning thereby the state and city. 



16 INTR OD UC TION. 

which we wish in exchange for our commodities. The fact 
that an individual lives in modem society and enjoys its 
blessings, gives that society an ethical claim upon the indi- 
vidual.^ 

This, it seems to me, is also a valid reply to Henry 
George's views on the nature of taxes. Curiously enough 
he is in this respect what some might call an ultra- conserva- 
tive, for he does not believe in taxes at all, but holds them 
to be robbery. The annual rental value of land in itself, 
apart from improvements, is due to the exertions of the 
community at large, according to the theory of rent as gen- 
erally accepted. Now Mr. George says, let society take 
its own, namely, rent, and defray all social expenses there- 
from ; but what I have produced individually by my own 
exertions is mine by natural right against all the world, and 
if the public takes a part of it, I am robbed. These are not 
his own words, but this is a succinct statement of one of his 

1 « < Why should I be robbed of my property to pay for teaching 
another man's children? ' is an individualist question which is not unfre- 
quently put as if it settled the whole business. Perhaps it does, but I 
find difficulties in seeing why it should. The parish in which I live 
makes me pay my share for the paving and lighting of a great many 
streets that I never pass through; and I might plead that I am robbed 
to smooth the way and lighten the darkness of other people. But I am 
afraid the parochial authorities would not let me off on this plea; and 
I must confess that I do not see why they should. I cannot speak of 
my own knowledge, but I have every reason to beheve that I came into 
this world a small, reddish person, certainly without a gold spoon in 
my mouth, and in fact with no discernible abstract or concrete ' rights ' 
or property of any description. If a foot was not at once set upon me 
as a squalling nuisance, it was either the natural affection of those about 
me, which I certainly had done nothing to deserve, or the fear of the 
law which, ages before my birth, was painfully built up by the society 
into which I intruded, that prevented that catastrophe. If I was nour- 
ished, cared for, taught, saved from the vagabondage of a wastrel, I 



GENERAL PROPOSITIONS RESPECTING TAXES. 17 

cardinal positions. The truth is, there is in modern society 
no such individual production as Mr. George assumes. 

What have I produced alone and unaided ? Nothing. 

What more than has been said is needed as a justification of 
taxation ? And does not this avoid the confusion of thought 
which inevitably results in every legal and economic treatise 
in which it is attempted to apply the principles of barter or 
exchange ? It is perhaps hazardous to criticise so eminent a 
jurist as Judge Cooley, whose learning and capacity entitle him 
to the universal esteem in which he is held ; but is not the fol- 
lowing quotation an illustration of the natural results of an 
attempt to reconcile things which are essentially irreconcila- 
ble? 

" It is no objection to a tax that the party required to 
pay it derives no benefit from the particular burden, e.g. a 
tax for school purposes levied upon a manufacturing corpo- 
ration. But in truth benefits always flow from the appropri- 
ation of public money to such purposes, which corporations, 

certainly am not aware that I did anything to deserve those advantages. 
And, if I possess anything now, it strikes me that, though I may have 
fairly earned my day's wages for my day's work, and may justly call 
them my property, yet, without that organization of society, created out 
of the toil and blood of long generations before my time, I should prob- 
ably have had nothing but a flint axe and an indifferent hut to call my 
own ; and even those would be mine only so long as no stronger savage 
came my way. So that if society having — quite gratuitously — done 
all these things for me, asks me in turn to do something towards its 
preservation, — even if that something is to contribute to the teaching of 
other men's children, — I really, in spite of all my individuahst leanings, 
feel rather ashamed to say no. And if I were not ashamed, I cannot 
say that I think that society would be dealing unjustly with me in con- 
verting the moral obligation into a legal one. There is a manifest 
unfairness in letting all the burden be borne by the willing horse," — 
Professor Huxley, in his article " The Struggle for Existence^'' pub' 
lished in the ^^ Nineteenth Century''^ Magazine for February, 1888. 



18 INTRODUCTION. 

in common with natural persons, receive in the additional 
security to their property and profits." ^ 

But this security, which it is said results from education, is 
called in question, and there are those who would have us think 
that widely diffused education renders property less safe. Sup- 
pose the tax-payer convinces himself that his taxes diminish 
the security of his property, and even convinces judge and 
jury, what then? The reader should also consult in this 
connection the statements on pages i6 and 17 of Cooley on 
"Taxation." It is stated that as taxation and protection are 
reciprocal, — which is only another way of saying that taxes 
are payment for services rendered, an exchange, — " the 
taxes levied by any government ought to be apportioned 
among the people according to the benefits which each re- 
ceives from the protection the government affords him," and 
straightway the learned judge adds, but " this is manifestly 
impossible. The value of life and liberty, and of the social 
and family rights and privileges, cannot be measured by any 
pecuniary standard." Mr. Thorold Rogers is also quoted 
with approval, to the effect " that if taxation were deter- 
mined by the comparative protection accorded to individuals, 
women and children should pay a higher rate than strong 
and healthy adults, since they have more need of assistance ; 
and, if the law be effectual, get more." How then can he 
add in the same paragraph, that the assumption which pre- 
scribes taxation in proportion to benefits received, " is suffi- 
ciently near the truth for the practical operations of govern- 
ment?" 

TAXES ARE NOT DEBTS. 

Second, Taxes are not debts. 

They are not based on contracts, either express or im- 

1 "Taxation," page 3, foot-note. 



GENERAL PROPOSITIONS RESPECTING TAXES. 19 

plied ; they are the contributions demanded by sovereignty, 
in which the taxing power is inherent and with which it is 
co-extensive. Laws which apply to debt do not apply to 
taxes ; and the abolition of imprisonment for debt would 
not carry with it abolition of imprisonment for failure to pay 
taxes, did the law at the time provide such a remedy for 
non-payment of taxes.^ 

THE POWER TO IMPOSE TAXES IS LEGISIATIVE. 

This is another way of saying that taxation and represen- 
tation go together. This phrase, " taxation and representa- 
tion go together," never signified in law that every tax-payer 
should have the right of suffrage. It simply means that the 
legislature, composed of representatives of the people, se- 
lected, now in this way, now in that, must vote the taxes, 
and as such, the maxim has become one of the estabhshed 
principles of constitutional government. There have been 
always and everywhere those excluded from the right of suf- 
frage, and, as is so well said in Cooley on " Taxation," " so 
long as all persons cannot participate in government, the 
limits of exclusion and admission must always be determined 
by considerations of general public policy."^ 

It is stated in our constitutions that the power to provide 
revenues by levying taxes pertains to the legislature. Two 
typical quotations from American constitutions are the fol- 
lowing : '' The general assembly shall provide such revenue 

1 Cooley, I.e. page 13. 

■^ Page 45. The explanation given in the same place of the mean- 
ing of the rallying cry of American revolutionists, no taxation without 
representation, seems to me most satisfactory. It was maintained that 
taxation for the colonies was the right of the local legislature, and that 
the English Parliament which laid taxes was a body in which they had 
no representation. 



20 INTR OD UC TION. 

as may be needful," ^ and "that no aid, charge, tax, burden, 
or fee ought to be rated or levied under any pretence with- 
out the consent of the legislature." ^ 

A still further restriction of the power to levy taxes is 
found in constitutional monarchies, for in these it is regarded 
as important to confine the right to the lower house. The 
form of the Queen's speech to ParHament on its opening 
points this out clearly, and is a beautiful illustration of an 
historical evolution, wrapped up in a few words. The 
"Speech from the Throne" read on Feb. 9, 1887, will 
serve as an example. It begins, "My Lords and Gentle- 
men," and proceeds at once to discuss the relations existing 
between England and other powers. It is mentioned that 
" cordial assurances of friendly sentiments as well as of an 
earnest desire to maintain the peace of the world" are 
received. The speech next touches upon the /Afghanistan 
boundary, and after referring to Abyssinia, Canada, Amer- 
ica, and other countries, proceeds, " Gentlemen of the 
House of Commons : The estimates for services for 1888, 
which have been laid before you, have been framed with 
a due regard to economy." When the subject of finan- 
ces is left, the style of the address immediately changes 
again, and the speech proceeds with, " My Lords and Gen- 
tlemen : The measure which at great labor you passed last 
session for the benefit of Ireland," etc. Thus is the finan- 
cial control of the House of Commons recognized in the 
forms employed in the speech from the throne in England. 

It was doubtless a feeling acquired in England which led 
our forefathers to provide in the federal constitution that reve- 
nue bills should originate in the House of Representatives. 
The provision appears to amount to very Httle at present, for 

1 Constitution of Illinois, Article IX., section I. 

2 Constitution of Maryland, Declaration of Rights, Article XIV. 



GENERAL PROPOSITIONS RESPECTING TAXES. 21 

the Senate through its power of amending bills seems to have 
as much control of the finances as the lower house. Should 
a fierce and protracted struggle between the House and Sen- 
ate ever break out, like struggles in England between the 
House of Lords and the House of Commons, it is not im- 
probable that the Representatives would seek to curtail the 
power of the Senate. 

Both branches of our state legislatures are elected, and it 
is considered that it makes very little difference in which 
house revenue bills are originated. It is indeed often 
expressly provided in our state constitutions that such bills 
may originate in either house, as for example in the consti- 
tutions of Illinois,^ Maryland,^ New York,^ and Florida.* The 
restriction to the lower house, of the right to originate bills 
for raising revenue appears to be regarded as of less impor- 
tance than it once was, for the constitution of Mississippi 
of 1832 contained such a provision, whereas it was dropped 
from the constitution of 1868.^ 

Representation does not always go with taxation ; for the 
District of Columbia is governed by Congress, and the peo- 
ple of the District are disfranchised. The territories are 
represented in Congress only by delegates ; but the people 

1 Article IV., section 12. 

2 Article III., section 27, 
^Article III., section 13, 
* Article V., section 12. 

^ The constitution of many of the states still retain the old provision, 
that bills for raising revenue must originate in the lower house. These 
are, N. H., Mass., Me., Vt., N. J., Pa., Ind., Minn., Neb., Del., Ky., 
Tex., Ore., Col., S. C, Ga., Ala., La. In most of these constitutions it 
is provided that the senate may propose amendments, as in the case of 
other bills, while four provide that no new matter not relating to the 
revenue may be introduced. These are Me., Vt., Del., Ky. See Stim- 
son's " American Statute Law," Volume I., page 79. 



22 INTR on UC TION-, 

living in them are subject to the indirect federal taxes. It 
cannot in fact be said that the power to tax always belongs 
to the legislature power, for there are countries like Russia, 
which have no true legislation ; but it can be laid down as 
a general principle with respect to modem constitutional 
countries. 

TAXES ARE REGULAR AND ORDERLY CONTRIBUTIONS. 

The word taxes comes from ra£^t? {ordo), and indicates 
something regularly recurring ; and taxes differ thus from sub- 
sidies granted by Parliament to the king in time of urgent 
necessities. These subsidies were also at times called aids. 
Forced loans and contributions are likewise different from 
taxes in this respect, for they are irregular and tyrannical exac- 
tions. Benevolences of early days were sometimes gifts, as the 
word signifies, and at other times irregular exactions ; and 
in either case they were not taxes, for taxes are not volun- 
tary offerings, although they are often paid willingly.^ It is 

1 The benevolences of early times were more in the nature of loans 
than taxes, although the word appears to have been used as equivalent 
to taxes; naturally, it would often be a matter of indifference whether 
a benevolence — really a forced contribution — were regarded as a tax 
or a loan. It appears, according to Dowell, that the rich bore a rela- 
tively small part of the public burdens, and that these benevolences, 
which they could well afford to pay, equalized matters somewhat. An 
amusing account is told of a benevolence which the handsome Edward 
IV. exacted of a rich widow. Expecting scarce ;^io, he received ^^ 20, 
which the widow paid him with the words, "By my troth, for thy 
lovely countenance thou shalt have even ^^20"; whereupon the king 
did " lovinglie " kiss her, and received for this royal favor another ;i^20, 
either, as an ancient writer said, "because she esteemed the kiss of 
a king so precious a pearle " or "because the flavour of his breath did 
so comfort her stomach." Benevolences were condemned, and as such 
abolished, by a statute of Richard III. See " History of Taxation and 
Taxes in England," by Dowell, Volume I., pages 156-9. 



GENERAL PROPOSITIONS RESPECTING TAXES. 11 

to be noticed, whether, that the words, aids and subsidies, 
have also been used for true taxes. The word has been 
retained after its meaning has been changed. More will 
be said of this in the following chapter. Tribute has some- 
times been used as equivalent to taxation, but it is more 
properly restricted to its usual meaning of forced contribu- 
tions levied by a victorious foreign power. 

WHAT IS CALLED A TAX IN ONE PLACE IS NOT ALWAYS 
CALLED A TAX IN ANOTHER. 

The law is more or less arbitrary in declaring what shall 
be regarded as a tax ; and the action of the courts in inter- 
preting the laws is far from uniform. It was held in IlHnois, 
for example, that a highway assessment payable in labor 
was not a tax, whereas in Nevada an assessment of four dol- 
lars or two days' labor on each male inhabitant between the 
ages of twenty-one and sixty years, was held to be a poll tax, 
a tax which was in that state unconstitutional.^ 

This is an illustration of the extent to which definitions 
are arbitrary both in law and political economy. Nature 
has not separated by sharp lines from all other objects 
any one object to which we give the name tax, as she has 
separated a horse or a tree from other natural objects. The 
word is an arbitrary sign for a somewhat varying and shifting 
idea. The best that can be done in such cases is to con- 
form with what appears to be the best usage, and to work 
for harmony, simplicity, and unity in expression. 

THE POWER OF TAXATION CANNOT BE DELEGATED. 

This is a general provision applicable in modern con- 
stitutional governments. The power to tax is delegated to 

1 Cooley, page 1 2, note 4. 



24 INTR OD UC TION. 

the legislature ; but the general rule holds that a delega- 
ted power cannot be delegated by its recipient to others. 
Judge Cooley speaks of the power of local political units 
as "one clearly defined exception" to the rule which has 
existed from time immemorial, and one which as a tradi- 
tional right has been tacitly or expressly incorporated in 
state constitutions. The power is frequently limited and 
regulated both by constitutions and laws. But even with 
respect to the local political units, it holds that the dele- 
gated power cannot be transferred. Some cities existed 
prior to the sovereign states of which they are now part, 
and retain such sovereign rights as have not expressly 
been taken from them. This is very often the case in 
Europe, and is a principle of the law of the cities in Ger- 
many. 



CHAPTER III. 

THE ORIGIN AND GROWTH OF MODERN TAXATION. 

TAXATION AS WE NOW UNDERSTAND IT, A NEW THING. 

WHILE something in the nature of taxes may be found 
even in the most ancient history, it is safe to say that 
taxation as we now understand the term is something new in 
the world's history. We now consider taxes as a regularly re- 
curring burden falling upon all inhabitants of a country, and 
we expect taxes to defray the greater portion of the heavy 
and increasing expenses of our various governments. 

It is not consistent with the plan of the present work to dis- 
cuss the revenues and expenditures of ancient states. It may 
be remarked, however, that the budget of ^ny state that ever 
existed before the nineteenth century would be almost in- 
significant when compared with the budgets of England, 
France, Germany, and the United States to-day. Grote 
estimates the annual expenditures of Athens in the brilliant 
age of Pericles at one thousand talents, say one million two 
hundred thousand dollars.^ War was then made self-support- 
ing by plunder and tribute, and victorious nations derived a 
revenue from it. Foreigners were looked to for revenue as 
an habitual thing ^ and personal services were exacted from 

1 In his "Public Economy of Athens," London, 1828, Boston, 1857, 
Boeckh says that the revenues of that city never exceeded two thousand 
talents. 

2 The protection-money of the resident aliens was an important item 
in the budget of classical Athens. 



26 INTR OD UC TION. 

citizens which were often quite burdensome. Officials were 
also remunerated, as in more recent times, by fees, and offices 
were often a source of net revenue rather than of expense, as 
is usual in modem times. 

What we would call indirect taxation, existed in both 
Greece and Rome, but it was evidently regarded as payment 
for privileges. Imported and exported commodities were 
taxed ; but this tax was doubtless held to be a proper pay- 
ment for the privilege of bringing goods into the country, and 
was put in the same category as harbor fees for the use of the 
harbor, or market charges for the use of the public market. 
These import and export duties were purely for revenue ; for 
they were the same on exported as on imported commodi- 
ties, and appear to have been what we would call ridiculously 
low. We hear much of a charge of a fiftieth, and ten or 
twelve per cent, on imports and exports was regarded as 
exorbitant ; whereas we in the United States are not startled by 
taxes of fifty and one hundred per cent, on imports. Boeckh 
divides the revenues of Athens into regular, ordinary revenues, 
and irregular and extraordinary revenues. The regular reve- 
nues are by him divided into four classes, namely : " Duties 
(rekr)) arising partly from public domains, including the 
mines, partly from customs and excise, and some taxes 
upon industry and persons, which only extended to the 
aliens and slaves ; fines (rt/xT^/xara) together with justice fees 
and the proceeds of confiscated property; tributes of the 
allied or subject states (t^dpot) ; and regular Liturgies 
(XeLTOvpycaL eyKUKAiot)."^ 

None of these revenues imply modern notions of taxation. 
It is to be observed in studying the revenues of ancient and 
mediaeval states that what appears to be taxation is often only 

1 Book III., I. 



ORIGIN AND GROWTH OF MODERN TAXATION. 27 

payment for service or for the use of property. xA.ncient 
tithes are an example. Where these were levied in Greece, 
they were as a rule payment for the public property, for the 
pubHc domain, and ought to be called rent rather than taxes. 
The land of subjugated peoples became the property of the 
conquerors, and the payments exacted for its use were like- 
wise rent, rather than taxes. A poll tax was also exacted of 
subjugated foreigners, which was a mark of subjugation and 
inferiority. " As the land has less value if it is subject to 
an impost, so are men more degraded if they pay a poll 
tax, for it is a token of captivity." These words are from 
Tertullian,^ and express a view also held during the reign of 
the Carlovingian dynasty; in fact, even up to the present 
century traces of the view that taxes were unworthy of free- 
men can be found. Direct taxes on land held in fee-simple 
were regarded as less degrading than taxes on persons, but 
these were borne with impatience, and Boeckh asserts that 
no such tax was laid before the Peloponnesian war.^ It is 
certain that before that time other revenues, especially those 
from the state-owned mines, were so superabundant that sur- 
plus revenue was distributed among the citizens of Athens. 
There are those, however, who hold that taxes were laid in 
early times both in Greece and Rome, and who even go so 
far as to claim that the right of taxation in time of need was 
fully acknowledged. This seems a rather strong expression, 
but there appears to be reason for the view that both Greece 
and Rome passed from an early period of taxation to one 
of freedom from taxation, a time of great prosperity, and 
then back again to a period of heavy and increasing taxa- 



1 Tertull., Apolog. 13, quoted from Boeckh, III., i. 

2 He says that the first regular property-tax was occasioned by the 
siege of Mitylene in 406 B.C., and he quotes the testimony of Thucydides. 



28 INTR OD UC TION. 

tion in the time of their decHne and fall.-^ How Hght the 
extraordinary taxes on property were is amply demonstrated 
by Boeckh by numerous examples.^ It appears that the 
average annual tax paid on the property of Demosthenes by 
his guardians amounted to only one-fifth of one per cent, 
on its valuation, or about one- eleventh of the rate in New 
York City in 1887. The Athenians regarded a tax of one 
and two-thirds per cent, as something so exorbitant as not 
to be seriously contemplated. 

The hturgies were somewhat like unpaid offices. They 
were regarded as a mark of distinction and involved large 
expenditures for the entertainment of the citizens or the 
defence of the country. The acceptance of these offices 
was compulsory, but as a rule more was performed by the 
recipients of the offices than was required, and they appear 
to have been held to be an oppressive burden only in a time 
of declining wealth and waning patriotism. 

Liturgies were also known in Rome and became a source 
of corruption and plutocratic rule. The sediles were ex- 
pected to contribute to the expenses for the amusement of 
the people, and the office of sedile was a stepping-stone to 
the remunerative offices in the provinces which were thus 
rendered accessible only to the wealthy. The office of " Rex " 
in the carnival of New Orleans resembles an ancient liturgy 
save that its acceptance is not obhgatory. It is, however, held 
to be an honor to receive it, as it was, in the best days of Ath- 
ens, to perform a liturgy. It is said to cost $10,000, and is to 
that extent a contribution of a rich man to a public amuse- 

1 Compare, in addition to Boeckh, " Die Steuer nach der Steuer 
fahigkeit," von Fr. J. Neumann, Jena, 1880 (Separat-Abdruck aus den 
Jahrbuchern fUr Nationaloekonomie und Statistik), also Roscher's 
" Finanzwissenschaft," Book III., Chapter IV. 

2 Boeckh, IV., 7. 



ORIGIN AND GROWTH OF MODERN TAXATION 29 

ment. The office of police justice in New York City has, at 
times, certain features which remind one of the sediles. Po- 
lice justices give picnics and entertainments to those resid- 
ing in their election districts, which cost large sums. 

It is interesting to notice from a recent essay on " Taxation 
in Japan," that in the old feudal period of that country's his- 
tory the rich were singled out for special taxation as for a 
compulsory public subscription, " that is to say, the govern- 
ment forced the rich citizens of a city or town to make such 
subscriptions for the pubUc treasury as the government asked 
for. This corresponds to the English ' benevolences ' under 
the Tudor- Stuarts. " ^ This essay shows, further, that for 
generations the principal public burdens were met by a labor 
tax and by payment of a sort of rental for the land, which 
appears to have belonged to the sovereign, in theory at 
least. It was in the nature of a tithe. Japanese taxation 
can be traced back to 87 B.C., and took its origin in a labor 
tax, expressed in days' work, for every inhabitant of middle 
age, regardless of sex. Such a tax would naturally bear 
more heavily on the poorer classes, and the special forced 
contributions from the rich may have been an attempt to 
compel them to bear more nearly their fair share of the pub- 
lic burdens. These two features of taxation in Japan, the 
labor tax and the land tax, or more properly rental, appear 
to have been prominent in all Asiatic countries with which 
we are familiar. 

The ideas of Rome in the age of Cicero are well illus- 
trated by a passage in his work " De Officiis." Cicero says : 
" Care should also be taken lest, as was often the case 
among our ancestors, on account of the poverty of the 

1 "Taxation in Japan," by Shiro Shiba, Wharton School Annals of 
Political Science, Volume I., page 94 



30 INTR OD UCTION. 

treasury and the continuity of wars, it may be necessary 
to impose taxes, and it will be needful to provide long 
before that this should not happen. But if any necessity 
for such a burden should befall any state (for I would rather 
speak thus than speak ominously of our own ; nor am I dis- 
cussing about our own state only, but about all states in 
general) , care should be taken that all may understand that 
they must submit to the necessity if they wish to be safe." 
What could better illustrate the difference between ancient 
and modern ideas of finance ? Cicero spoke of a possibil- 
ity of taxation with hesitation, and was careful to point out 
that his remarks were purely general, as if to predict tax- 
ation in Rome were something terrible and unpatriotic, be- 
traying a lack of confidence in the future of his own state. 
Much as if one should now predict the overthrow of our 
existing social order in the near future by socialism ! Yet 
it is probable that Cicero did have Rome in mind, his 
protestations to the contrary notwithstanding ; for, if Plutarch 
may be relied upon, a tax was levied in 43 B.C., the year 
after Cicero wrote the " De Officiis," although for over one 
hundred and twenty years the Roman people had been 
relieved of taxes by successful wars. 

THE REVENUES OF THE STATE IN THE MIDDLE AGES. 

The patrimonial idea of the state obtained in the early 
Middle Ages when the sovereign regarded the state as his 
own, and at times claimed the right to dispose of it by will, 
or even to sell it, as if it were a piece of private property. 
Brandenburg, which has become Prussia, serves as an illus- 
tration. Otho the Lazy became involved in debt in the 
fourteenth century, and sold his right as margrave for 
200,000 florins, and thereafter Brandenburg was mort- 



ORIGIN AND GROWTH OF MODERN TAXATION. 31 

gaged, divided, sold, and transferred like a private estate 
until it came into the possession of the Hohenzollems in 

1415- 

When such ideas obtained, it was natural to expect the 

monarch to defray all expenses of government, for no 
distinction was made between his public and private ex- 
penses ; they were all his own, just as all employes under 
the sovereign were servants of the prince, whether employed 
in his household or in public business. They were all called 
filrstliche Diener, servants of the prince, and it was only 
at a later period that the term Staatsdiener — state-servants 
— was employed, and then these were separated from the 
Hofdiener — servants of the court. ^ 

Large domains were set apart for the support of the sov- 
ereign, both in his public and private capacity, here indis- 
tinguishably blended ; and revenues which would have been 
private for any one else, were pubhc as well as private. It 
was a favorite theory of law and practice that all private 
property of a prince became public the moment he as- 
cended the throne, and it was so declared in France by law 
in 1607. It has thus in modem times become extremely 
difficult to separate public from private property, and this 
has led to complications. This also explains confiscations 
which were often regarded as a mere resumption by the 
public of property which had always belonged to the public, 
but which had been set apart for a time for certain special 
purposes. Land was held on feudal tenure, which means 
that the nominal owners were only tenants, from whom a 
return to the cro\vn was due. Various fees and duties, and 

1 Staatsdiener and Staatsdienst are employed in the Prussian code 
of Frederick the Great — das pretissische allgemeine landrecht. On 
this whole subject, see that excellent little work, " Der Staatsdienst in 
Preussen," by Clemens Theador Perthes, Hamburg, 1838. 



32 INTRODUCTION. 

other special rights of the crown, called "regalia," furnished 
revenues. The Jews, particularly in England, were made to 
contribute heavily to the support of the crown, from which 
they were supposed to derive special protection. The very 
interesting monograph on " The Exchequer of the Jews of 
England in the Middle Ages," by Charles Gross, Ph.D.,^ 
.gives valuable information on this point. It appears that 
ithe cities on the Continent derived revenue from the Jews 
raiore frequently than did the sovereign. " In Germany the 
tcrewn became weaker and weaker, parting with most of its 
.prerogatives, among which was the control of the Jews, to- 
.getKer with the right to tax them. What the German towns- 
imen .. .. . really sought from the king, and often secured, 
was permission to have Jews among them, from whose ple- 
■,thoric purses they could borrow money, and, above all, 
squeeze heavy taxes. In England, on the other hand, the 
• crown clung .tenaciously to this, as well as to its other re- 
.gaHa."2 

The revenues derived from the Jews may be divided into 
.four classes;: namely, reKefs, escheats, fines, and tallages. 
iRelief was an inheritance tax, which generally amounted to 
one-third of the estate; while escheats were forfeitures for 
^ crimes ^nd offences, real or imaginary, — for slaughtering 
'Christian children, coin-clipping, counterfeiting, and the 
ilike, and it is said that it was found convenient to bring false 
. accusations against the Jews when the treasury of the king 
: needed replenishing. Fines were used in a broad sense, 
and included what we might term fees. They were paid for 
permission to marry or even not to marry, and for the priv- 
ilege of changing one's residence. Tallages were simply 

1 London. Office of the Jewish Chronicle, 2 Finsbury Squaire, 
1887. 

2 Gross, page 4. 



ORIGIN AND GROWTH OF MODERN TAXATION. 33 

taxes, sometimes poll taxes or capitation taxes, but generally 
taxes assessed 4n proportion to one's means. Dr. Gross 
estimates that the average annual tallage did not greatly ex- 
ceed ^5000 in the reign of Edward I. ; but at that time 
the entire revenue of the crown was only about ;£"65,ooo. 
It is evident that the Jews then paid altogether considerably 
over one-tenth of these revenues.^ 

An interesting account of a forced loan levied in Frank- 
fort-on-the-Main, during the Thirty Years' War, not only 
illustrates the treatment of the Jews, but is a further indica- 
tion of the character of financial operations in the Middle 
Ages. The essay from which this account is taken was 
based on a study of original documents, and appeared in 
the Wochenblatt der Frankfurter Zeitung for Jan. i, 1888. 
Frederick V. of the Palatinate, and the chosen king of Bohe- 
mia, when defeated by the emperor, took refuge in Holland, 
and later proceeded against his enemies, with his general, 
Ernst von Mansfeld. When near Frankfort he sent word to 
the Jews that, as their protector, he was entitled to a yearly 
payment ; that this had not been received for some years ; 
and that he now wanted all that was due, in addition to 
6000 thaler. The Jews were astonished, for they had never 
heard of this protectorship before. They did not refuse, 
but delayed payment on various pretexts. Christian of 
Brunswick, in the meanwhile, approached Frankfort from 
another side, and demanded 10,000 gulden from Frankfort, 
promising to leave the Jews unmolested, on condition that 
he received the sum. He justified the demand on the 
ground that the Jews were lawful prize in time of war. Fi- 
nally, when these two were defeated, the Emperor Ferdinand 
II. pretended that the Jews had paid to the city treasury 

1 Gross, pages 25-29. 



34 INTR OD UC TION. 

10,000 thaler for his enemies, and on this account he feigned 
great anger, and demanded the 10,000 thaler himself, and 
received that sum. 

The view gradually gained ground that the ofifice of sov- 
ereign was simply a public trust, and that the king ruled by 
right divine, and not as the owner of a piece of property. 
It then became natural to exact from the people assistance 
for the support of a government in which they could claim a 
real interest. 

Yet even Jean Bodin, in the latter half of the sixteenth 
century, in his work " De la Republique," prefers revenues 
from public domain to all others for the support of govern- 
ment, and speaks of taxes in a manner which reminds one 
of Cicero. He says a Christian prince will resort to them 
as rarely as possible. Montesquieu expresses similar opin- 
ions about the desirabihty of revenues from domains in his 
" Esprit des Lois," Braunschweig- Wolfenbiittel declared in 
the old German Reichstag, in 1653, that taxes were contrary 
to the nature of the state because one entered into civil 
society to protect one's property and not to have it taken 
away. The words used for taxes are significant, for they 
show how taxes were regarded. What were really taxes 
were called aids and subsidies^ and benevolences {^sub- 
sidium, adj'utoj'ium, petitio. Bede) . They were something 
irregular and unusual, something supplementary to other 
revenues, and were granted by the estates of the realm 
as a favor.^ 

1 A tax for the benefit of the Lord Proprietor of Maryland, laid by 
the assembly of 1641 and 1642 was called "An act for granting a sub- 
sedye." See " Sketch of Tax Legislation in Maryland," in " Report 
of the Maryland Tax Commission " in 1888, page cxii. 

2 When in this century Karl Ludwig von Haller, in his " Restaura- 
tion der Staatswissenschnfl " (six vol mes, 1816-26), denied the right of 



ORIGIN AND GROWTH OF MODERN TAXATION. 35 



TAXES LONG HOLD A SUBORDINATE POSITION IN BUDGETS OF 
STATES. 

Taxes were long held to be something merely secondary 
and subordinate, and it was necessary to show first the in- 
sufficiency of other revenues. Taxes may still be considered 
as something subordinate in a modern budget, as the state- 
ment of receipts and expenditures is called. First, an esti- 
mate is made of expenditures, then of revenue from fixed 
sources of income, in particular from productive property of 
the state or municipality, or other local pohtical units, and 
finally direct taxes are levied to meet the deficiency. This 
deficiency is now larger than the revenues from other sources 
in most states ; and when to direct taxes we add indirect, 
perhaps the only modern states which derive a major por- 
tion of their revenues from domains and public works, are 
four of the German states. What was once merely sup- 
plementary, and is now in budgets often treated as sub- 
ordinate, yields the greater portion of all revenues.^ The 
old forms often continue, however. As late as 1809 an 
edict of Nassau, countersigned by Marschall, recognized the 
principle that taxes should be raised only to cover deficien- 
cies after the revenues from the public domains and from 
the regalia had been exhausted. Article 109 of the consti- 
tution of Wiirtemberg, treats first of the needs of the state ; 
second, of the revenues from the crown land ; and third, of 

taxation and claimed that it was more fitting for the master (the sover- 
eign) to support his servants (the subjects) than to reverse the process, 
it sounds indeed like a voice from the tombs. See Roscher, I.e. 

1 See my Introduction to Worthington's " Historical Sketch of the 
Finances of Pennsylvania," Volume II., No. 2, Publications of the 
American Economic Association, Baltimore, 1887. 



36 INTR OD UC TION. 

the deficiency still required to provide for the expenditures 
of the state. The German authority, von Seckendorff, says 
the revenues of the domains are destined, first, for the sup- 
port of the royal family ; second, for payment of the civil 
service employes ; third, for embassies ; fourth, for castles, 
fortresses, streets, etc. ; fifth, for churches and schools ; sixth, 
for amusements and entertainments.^ 

As the modern state developed by means of consolidation 
and concentration of scattered powers, as standing armies 
took the place of plundering baronial troops, and as payment 
in money, and exchanges through the medium of money, 
took the place of barter and truck, and as paid services 
took the place of compulsory services like the corvees of 
France, the needs of the state continually increased, and 
the insufficiency of old sources of revenue became year 
by year more manifest. The wasted resources of the princes 
must be added to the causes which increased the fre- 
quency of taxes. Weak princes squandered their public 
and private property, much as the people of the United 
States are doing at the present time. Strong princes in 
parliamentary states found it easier to raise revenues by 
sale of public property than by taxation. Feudal conditions 
were revoked, and tenants became fee-simple proprietors, 
and thus the many were robbed for the few. Theft and 
usurpation by nobles still further diminished public land, 
just as English and Scotch nobles, and others, are robbing 
us of our vast treasures, while a careless and indifferent and 
corrupt Congress wastes its time in petty wrangles and sense- 
less partisan controversies, refusing to pass laws for the pro- 
tection of the public domain which have met with the all 
but unanimous approval of upright and thinking citizens. 

1 See Roscher's " Finanzwissenschaft," Book I., Chapter I. § 9. 



ORIGIN AND GROWTH OF MODERN TAXATION. 37 

Thus it happened that taxes increased in frequency, until 
they became regularly recurring burdens, and contributions 
which were once of a more or less voluntary character be- 
came compulsory. There is an old proverb to the effect 
that he who gives three times establishes a claim against 
himself. This has been true in finance. New Haven offers 
a curious illustration. " In the autumn of 1644, the town 
began its annual contributions for the support of poor scholars 
at Harvard College. The offering consisted of a peck of 
wheat, or the value of the same, from every one ' whose hart 
is willing.' The largess lost its voluntary character and was 
regarded as a tax. The collectors of college corn were regu- 
larly elected town officers until the end of the colonial ex- 
istence."^ 

In this same year an interesting note in the Records of 
the Colony of Massachusetts Bay in New England shows 
that a similar request was made in that colony. The Records 
of the General Court read : " It is ordered yt y® deputies 
shall comend it to y® sev'"all towns (& y^ eld'^s are to be 
desired to give their furth^ance hereto) w*^ declaration of 
y® co^'se w*^^ was ppounded by y® said comissioners, & hath 
bene put in practice already by some of y^ other colonies, 
viz. : of ev^'y family alow^ one peck of corne, or 12*^ in mony 
or oth' comodity, to be sent in to y^ Treasurer for the col- 
ledge at Cambridge, or where else hee shall appoint, in 
Boston or Charlstowne."^ The implied voluntary character 
of the offering is noteworthy. It may be doubted whether 
in reality it ever had any voluntary element at all. Our 
Puritan ancestors, with their stern ideas of duty and their 
readiness to apply a vigorous boycott to obnoxious individu- 

1 Levermore, " The Republic of New Haven," page 77. 

2 Volume II., page 86. 



38 INTR OD UC TION. 

als, would probably have made things most uncomfortable 
for any one who should have objected to his share of the 
contribution. 

A curious act of the Assembly of the Province of Mary- 
land, dated 1650, is worthy of notice in this connection. 
It is entitled "An Order for the Relief of the Poor," and it 
directs that an " equal assessment " be levied on such inhab- 
itants of St. Mary's County as will not make a willing contri- 
bution for the maimed, lame, and blind.^ 

The proprietary government of Maryland was succeeded 
by the convention of June, 1 7 74, and this formed a tempo- 
rary government in the following year on the basis of " Arti- 
cles for Association." This endured for two years longer, 
or until 1777, and during that time the government was 
supported by contributions which were called voluntary, but 
the following quotation from the "Sketch of Tax Legisla- 
tion in Mar^^land" throws a vivid light on the development 
of finance : " In every county, contribution or subscription 
lists were presented to the inhabitants. If any person de- 
clined to contribute, his name and his refusal were noted, 
and then consequences followed which, in those times, were 
more serious than a tax sale. In one county- the names of 
those refusing were directed to be recorded in perpetual 
memory of their principles ; in others they were publicly 
declared by county resolutions enemies to America, and 
as such published in the Mar}dand Gazette reported to 
committees of observation, etc. As the unfortunates who 
were so injudicious as to allow themselves to be returned 
delinquent became the objects of distrust and aversion, and 

1 " Report of Maryland Tax Commission to the General Assembly," 
January, 1888. Part entitled " Sketch of Tax Legislation in Maryland," 
page cxxvii. 

2 Charles County. 



ORIGIN AND GROWTH OF MODERN TAXATION. 39 

subjected themselves to the suspicion of Toryism, with its 
grave consequences of arrest, banishment, and confiscation, 
it will be readily believed that these means were capable of 
being very nearly as effective as compulsory taxation." ^ 

It was undoubtedly a more general practice in earlier 
times to give money to defray the regular ordinary expenses 
of government than now, while at the present time it is 
doubtless true that more is given for specific purposes, 
many of them purely public, than formerly. The citizens of 
Baltimore and Indianapolis will point the stranger with pride 
to fine public buildings constructed for less than the appro- 
priations made for them. Other instances of large results 
with public expenditures can readily be found, and it will 
frequently be discovered that unpaid services of citizens, 
who desired to see the most made of the appropriations, 
contributed to the success of these undertakings. A gratify- 
ing example of large results with small expenditure is afforded 
by the Baltimore Manual Training School. 

Citizens of Rhode Island made voluntary contributions 
toward her support in early days.^ 

Benjamin Franklin left a fund of ^looo, which was to 
be lent to young married couples in sums not to exceed 
;^6o. He thought that this would at the end of a century 
amount to ^^i 31,000, when ^31,000 was to be devoted to 
general municipal improvements. He directed that ^100,- 
000 should be retained for loans to young married couples 
until the expiration of the second century, when he thought 
the principal would be equal to over four millions of pounds. 

1 " Report of Maryland Tax Commission," 1888, page cxxxi. 

2 From an excellent paper on Taxation in Rhode Island, by H. B. 
Gardner, graduate student and late fellow of the Johns Hopkins Uni- 
versity, as yet an unpublished manuscript. It will probably appear in 
the following year as a contribution to the Johns Hopkins University 
Studies in History and Political Science. 



40 INTR OD UC TION. 

It was then to be divided between state and city. The 
fund now amounts to $73,321.00. A similar fund left to 
Boston amounts to over $315,000.00. One of the pur- 
poses for which Stephen Girard left his immense estate to 
Philadelphia was to improve the city " and diminish tax- 
ation." 1 

Examples of this sort continue even up to the present. 
The legacy of John L. Lewis of New Jersey, for the diminu- 
tion of the debt of the United States, figures in the finance 
report for the year endings June 30, 1883, for $950,000. The 
Duke of Brunswick left a large sum of money a few years 
ago to the city of Geneva, Switzerland, which was used to 
pay the city debt, to erect a monument to the Duke, and to 
build a fine opera house. These instances are simply by 
way of illustration, for it would not be possible, without a 
vast amount of research, to tell the exact significance of 
gifts, and their amount in proportion to all expenditures. 

The use of lands was given in payment for services in the 
Middle Ages. We may say that the offices were endowed, 
and frequently the land was retained, when the duties of 
the office were abolished or transferred to some one else. 
Thus the public domain was diminished. The endowment 
of the EngHsh churches (glebe lands) continues to the 
present. 

Offices were sold for revenue in the Middle Ages. This 
often practically amounted to a sale of an annuity, for the 
offices were in many instances mere sinecures. Richelieu 
abolished 100,000 offices which had been for the most part, 
it appears, established in order to be sold. The civil service 
became so poor under this system in France that it was 

2 See "Philadelphia 1681-1887, A History of Municipal Develop- 
ment," by Allinson and Penrose, Baltimore, 1887, Chapter III. 



ORIGIN AND GROWTH OF MODERN TAXATION. 41 

necessary to reconstruct a new civil service, and thus the 
country had to support two sets of officials, — the sinecur- 
ists and those who did the work. 

Among the other devices for raising revenues may be 
mentioned the sale of titles. This was actively carried on 
by James I. of England, when the title of baron brought 
^10,000, and that of an earl ^,{^1 2,000. The feudal dues 
paid to James amounted to ;^i 80,000, out of a total budget 
of ;j^45 0,000.^ The crown lands rented for ^32,000 at this 
time, and the rent subsequently rose to ^80,000. Lotteries 
were formerly often relied upon to defray a portion of the 
state and local expenditures in this country, and are still 
used for that purpose in two of our states. The Louisiana 
lottery^ is the best known in this country. Prussia and 
other European states still support lotteries, and one reason 
why in some places all private lotteries were suppressed was 
to give the state a monoply. 

It is surprising at how late a date taxation, as we now un- 
derstand it, came to be rehed upon as the regular ordinary 
source for the major portion of vast pubHc expenditures. 
Indirect taxes, which in England can be traced to the twelfth 
century, were made important by Charles II., as will be seen 
in a subsequent chapter of this work, and modern public 
debts were first established in the reign of William and Mary, 
and it may, perhaps, be said, roughly speaking, that modern 
financiering in England was established about 1 700 

1 Walker's " Political Economy," Part VI., Chapters XV. and XVI., 
and Wilson's " National Budget," etc., Chapter I. 

2 Louisiana derived $40,000 from the Louisiana Lottery Company in 
1882. Kentucky receives $4000 a year from a tax on lotteries. Nevada 
derives a revenue from " gaming licenses." 



42 JNTR ODUC TION. 



TAXES FIRST PAID ONLY BY THE WEAK AND DEFENCELESS. 

Adam Smith says that, in the period of feudalism, only 
those were taxed who were too weak to resist, and on ac- 
count of their weakness the poorer classes have always, 
even up to the present time, been obliged to pay an undue 
share of taxes, as we shall see hereafter. It is now, however, 
a recognized principle that taxes should be laid in proportion 
to abihties, and, while this principle receives many different 
interpretations, the heavier burdens of the poor at the pres- 
ent time are due to poor systems of taxation and faulty ad- 
ministration of the laws, and not to openly expressed principle. 
Adam Smith probably had France particularly in mind, and 
there the principle was widely accepted that the clergy pro- 
tected the country by their prayers, the nobles by their arms, 
and the commons by the taxes they paid. These ancient 
regulations were swept away by the French Revolution, and 
in this century the universality of the duty to pay taxes has 
become an accepted principle of political science and of 
actual practice. 

The statement of Adam Smith is confirmed by the kinds 
of taxes which were employed to raise the revenues. Poll 
taxes, or capitation taxes, were frequent, and as these often 
demanded an equal sum from every one, they were specially 
oppressive. The insurrection of Wat Tyler in the reign of 
Richard II. was occasioned by a poll tax.^ These taxes have 
been generally abolished in Europe and America. The 
constitutions of Maryland and Ohio especially prohibit poll 

1 This was preceded by an attempt to tax all in proportion to ability, 
but the resistance of the powerful was so obstinate that it was aban- 
doned. See Wilson's "National Budget," etc., Chapter I. 



ORIGIN AND GROWTH OFMODERN TAXATION 43 

taxes, but they still linger in some of our states as a relic of 
barbarism.^ 

The hearth and window taxes were especially oppressive. 
The window taxes increased with the number of windows, and 
thus people were induced to deprive themselves of the light. 

The workings of this tax are well illustrated by a passage 
in Fielding's " Tom Jones." A landlady is represented as 
saying to an officer of the army : "To be sure it is natural for 
us to wish our enemies dead, that the wars may be at an end 
and our taxes lower ; for it is a dreadful thing to pay as we 
do. Why, now there is above forty shillings for window lights, 
and yet we have stopped up all we could ; we have almost 
Winded the house, I am sure."^ 

A curious illustration of Adam Smith's assertion that those 
paid taxes who were too weak to resist, is found in Mr. James 
Russell Lowell's "Address on Democracy." The author is 
speaking of the Provinces of Lower Austria in 1546, in 
which there were five sorts of persons, — clergy, barons, 
nobles, burghers, and peasants, — and he quotes from Ber- 
nardo Navagero, to the effect that no account was made of 
the peasants because they "had no voice in the diet." "Be- 
low the peasants," continues Mr. Lowell, "it should be 
remembered, was still another even more helpless class — the 
servile farm laborers. The same witness informs us that of 
the extraordinary imposts, the peasants paid nearly twice as 
much in proportion to their estimated property as the barons, 

1 "That the levying of taxes by the poll is grievous and oppressive, 
and ought to be prohibited; that paupers ought not be assessed for the 
support of the government." — Constitution of Maryland, Declaration 
of Rights, Article XV. This provision in regard to poll taxes has been 
incorporated into the Ohio constitution. 

2 "Tom Jones" appeared in 1750. It was not until 1851 that this 
tax was abolished. 



44 - INTRODUCTION. 

nobles, and burghers together. Moreover, the upper classes 
were assessed at their own valuation, while they arbitrarily 
fixed that of the peasants, who had no voice." ^ 



THE EARLY AJVIERICAN \^EWS OF TAXATION. 

The right of taxation has not always been recognized even 
in America, new as is our history. In the report of Mr. 
Wolcott, Secretary of the Treasury, made to Congress in 
1796, on the systems of taxation in the various states, it was 
stated that no direct tax had been levied in New York since 
1788, and that no objects of taxation were defined by the laws 
nor any principles of valuation prescribed. The credit and 
funds of the state were ample, and their product sufficient 
to supersede the necessity of taxation except for county and 
local purposes. The tax of 1788 amounted to ^60,000. 
The annual civil expenses of the state were $75,900 in 1796, 
in addition to which there were grants to universities, col- 
leges, schools, hospitals, and some " contingent " expenses.^ 

In Rhode Island there was an attempt to conduct the 
government by all sorts of makeshifts, without regular taxa- 
tion, for some time after the foundation of the colony.^ Phil- 
adelphia was greatly embarrassed on account of the absence 
of the power to lay taxes, even in the eighteenth century ; 
and it was resolved in 1710 "to make application to the 
assembly for the passage of an act empowering the corpora- 
tion to make ordinances and by-laws for the better support, 
rule, and government of this city." It appears that no 

1 " Democracy, and Other Addresses," by James Russell Lowell, Bos- 
ton, 1887, page 12. 

2 American State Papers, Finance, Volume I. 

3 Authority is Mr. H. B. Gardner's paper, to which reference has al- 
ready been made. 



ORIGIN AND GROWTH OF MODERN TAXATION. 45 

power of taxation whatever existed under the charter of 
1701 ; and "by the common law the power of taxation of 
the borough, if it can be said to have existed at all, was 
of the most restricted character ; nor could the king or 
proprietor grant such a power. . . . The main sources of 
revenue were from fines, fees, freedoms, city property, and 
lotteries." ^ Fines were heavy and oppressive on account 
of the necessities of the city, while wharves, market-stalls, 
and other city property yielded an income increasing with 
the growth of the city. The control of taxation by the people 
was established by an act of 1712. 

The state of Pennsylvania levied the first direct state tax 
in 1785. It was an annual tax of ;£^76,945, and was levied 
until 1789, when it was discontinued. How poorly it 
was collected may be seen in the fact that the arrearages 
in 1795 amounted to ^14,560. The annual expenditure 
of the state government was given as ^130,000 in the re- 
port of Mr. Wolcott on the various systems of state taxa- 
tion.^ The revenue of the state then exceeded this amount, 
and it was stated as probable that the state would con- 
tinue to be exempt from the necessity of taxation except 
for county purposes. Pennsylvania hoped to abolish tax- 
ation in the present century, during the early part of which 
a comparatively small proportion of the revenues was raised 
by taxation. "In 1810 the revenues of the state amounted 
to ^353,965.08. Of this sum the interest on state invest- 
ments returned ^134,887.95 ; lands, ^93,644.42 ; taxes, 
;$83,658.25. The expenditure per capita was seventy- 
three cents, and taxes per capita were thirteen cents. . . . 

1 See Philadelphia, by AUinson and Penrose, Baltimore and Phila- 
delphia, 1887, pages 22-29. 

2 American State Papers, Finance, Volume I. The date of the report 
is 1796. 



46 INTR OD UCTION. 

Before the year 1825, with the exception of the tax on 
bank dividends, there was, with one minor exception, no 
state taxation whatever except in the way of hcense. In 182 7 
the House Committee of Ways and Means reported that 
there had been a steady increase in the various permanent 
sources of revenue ; that they would suffice for the general 
expenses of government, and that the surplus in a few years 
would redeem the public debt." ^ 

The financial history of Pennsylvania illustrates the ex- 
treme difficulty with which taxes can be established among 
people who have either never been used to them, or who 
have grown unaccustomed to them. The people refused to 
submit to any taxation whatever, and the burdens resting on 
the public works increased constantly, while no appeals could 
move them to raise any money for the support and mainte- 
nance of their own property; as fooHsh a proceeding as 
for the stockholders of a railway corporation to refuse to 
levy an assessment on stock for any purpose. The unwill- 
ingness to submit to taxation led to the sale of the public 
works of Pennsylvania, canals included, and thus the state 
suffered loss. 

The financial history of Maryland illustrates the same fact. 
There were few instances of state taxes before 1841, during 
the present century, and by that time people had learned to 
look upon taxes with great aversion. The state had reck- 
lessly lent its credit to aid in the construction of works of 
internal improvement, and it became embarrassed by their 
failure to meet expectations. So obstinate was the resist- 
ance to any taxation whatever, that repudiation was openly 
advocated as preferable to taxation. Better advice pre- 

1 Worthington, " Historical Sketch of the Finances of Pennsylvania." 
American Economic Association monograph, May, 1887. 



ORIGIN AND GROWTH OF MODERN TAXATION. 47 

vailed, and the present methods of taxation in Maryland 
were instituted in 1841. 

It is important for us to remember, especially at the 
present time, how difficult it is to re-establish taxation when 
the right to tax has been allowed to fall into disuse. 

OTHER SOURCES OF REVENUE AT THE PRESENT TIME. COM- 
PARATIVE STATEMENTS. 

While taxes have increased enormously during the present 
century,^ a large proportion of the revenues of modern states 
is still derived from other sources than taxation. The pub- 
lished budgets of states and cities are so imperfect, even in 
Europe, that it is difficult to give full and complete informa- 
tion on the point ; and in America the information which 
can be gathered is still more fragmentary.^ It is to be 
noticed in this connection that the more modern budgets 
show a tendency to assume the character of the older budgets 
in some respects. Taxes occupy a place of relatively decreas- 
ing importance in the budgets of many states and cities. 
This is due to the acquisition of public works, like railroads, 
telephones, and telegraphs, to the extension of forest-cul- 
ture by the states, and to the extension of municipal func- 
tions by the purchase or construction, of street-car lines in a 
few instances, of water-works, gas-works, and electric-light- 
ing works more frequently. This explains the more cheer- 
ful tone which may be observed of late in the English 
municipalities. The rapid increase in local debts in Eng- 
land excited a good deal of alarm for a time, but it is now 

1 Facts in regard to this will be found in another part of the present 
work. 

2 With the resources of the United States at his command, a cen- 
sus official might gather enough facts to make some estimates, but these 
would be more or less uncertain. 



48 INTR OD UC TION. 

found that many of these cities have valuable assets to show 
for expenditures. It is possible to see only the beginnings 
of such a movement in the United States. New York state 
has entered upon forest-culture, and it is now proposed that 
the United States should do the same.^ 

Water-works are generally owned by our municipalities, 
and gas-works rarely. Wheeling, West Virginia, acquired 
private gas-works by purchase in 187 1, and the controversy 
about the Philadelphia gas-works in 1886 has been decided 
in favor of municipal ownership, in spite of powerful pressure 
by a syndicate of prominent men. It may safely be said that 
the sentiment in favor of municipal enterprises in the matter 
of gas-supply is a growing one, and it seems probable that 
popular pressure for federal ownership and control of the 
telegraph is becoming more intense. 

The only public street-car line in the United States is that 
which runs over the New York and Brooklyn Bridge, but 
American municipalities exhibit an increasing inclination to 
derive a revenue from street-cars. A considerable percent- 
age of the revenues of Baltimore is derived from the special 
tax of nine per cent, on the gross revenues of all street-car 
lines, and the regular taxes which they pay in addition, like 
all other corporations. A recent New York state law com- 
pels all cities in that commonwealth to sell franchises for 
street-cars at public auction for a percentage of gross reve- 
nues. The present mayor of New^ York City, Hon. A. S. 
Hewitt, advocates the construction and ownership of a rapid 

1 A bill has been introduced into the Congress of the United States, 
entitled " A Bill for the Protection and Administration of Forests on the 
Public Domain." It is indorsed by the American Forestry Congress, 
and may be said to meet with popular approval. The only question is 
whether the land and lumber thieves will be powerful enough to 
defeat it. 



ORIGIN AND GROWTH OF MODERN TAXATION. 49 

transit system in that city by the municipahty, and a bill has 
been introduced into the New York legislature to authorize a 
municipal rapid transit system in cities having over 800,000 
inhabitants. American states draw an increasingly large 
proportion of their revenues, in similar manner, from rail- 
roads operated by steam, several states defraying all or nearly 
all of their expenses from these revenues. A determination 
to draw more than formerly from the revenues of telegraph, 
telephone, express and street-car companies is already mani- 
fest. It may be said that we can discern a tendency in taxes 
to occupy a place of relatively decreasing importance even 
in American budgets. 

The following table gives the net revenues of certain 
European states from domains and forests, during the fiscal 
year 1880-81 : — 

1880-81.1 

REVENUES FROM DOMAINS AND FORESTS, 

Prussia 45,612,000 marks ^ 

Bavaria 19,625,000 " 

Kingdom of Saxony 7,007,000 " 

Wiirtemberg 5,339,ooo " 

Baden 3>537jOOO " 

Austria 1,740,000 " 

Hungary 11,497,000 " 

France 25,912,000 " 

Italy 1,247,000 " 

Great Britain 6,700,000 " 

The following table gives, in columns one and two, per- 
centages of revenues derived by certain states from profits 

1 This table is taken from Roscher's " Finanzwissenschaft," 2d 
edition, page 34. 

2 A mark equals 23.8 cents. For rough calculations four marks are 
usually considered as equal to one dollar. 



50 



INTRODUCTION. 



on domains and forests in 1873 ^^^ 1880 respectively, and 
in columns three and four gives the percentages of revenues 
derived from profits on all gainful pursuits of the states, or 
the " entire private acquisition," ^ as it is called, in the years 
1873 ^^d 1884-85 respectively. The profits are calculated 
by subtracting all expenses from gross receipts. The per- 
centages for the year 1884-85 are given for only a few Ger- 
man states. 





DOMAINS AND FORESTS. 


ALL GAINFUL PURSUITS.^ 


STATE . 


1873 


1879 


1873 


1884-5 


Saxony 


9-7 


8.9 


54-7 


72.70 


WUrtemberg . 








13.2 


9.9 


42.9 


37-92 


Bavaria . . . 








^1'Z 


15-9 


37-0 


56.71 


Baden . . . 








7-1 


3-9 


36.6 


58-49 


Prussia . . . 








8.4 


7-5 


31-9 


66.29 


Denmark . . 








2.9 


4.6 


26.0 




Switzerland 








4.1 




24.4 






Belgium . . 








I.O 


0.9 


18.6 






Netherlands . 








1.9 


1-3 


17.0 






Norway . . . 








1.2 


0.7 


13-05 






Greece . . . 








3-6 


3-4 


12.7 






Russia . . . 








34 


0.4 


12.5 






Italy .... 








3-0 


2.0 


10.2 






Chili .... 








1-7 


^•l 


8.3 






Servia . . , 








1.8 




6.6 






Austria . . . 








0-5 


0.2 


4-9 






Portugal . . 








0.6 


0.2 


4-7 






France . . . 








1.4 


1.9 


3-9 






Great Britain . 








0.6 




2-5 






German Empire 














7.65 


Alsace-Lorraine . 












... 


15.11 



1 Der ganze Privaterwerb. 

2 Columns one and three are taken from Wagner's " Finanzwissen- 
schaft," Part I., 2d edition, page 356. Column two is taken from 



ORIGIN AND GROWTH OF MODERN TAXATION. 51 

It is worthy of notice that the net profits on German 
state railways more than pay the interest on all the debt of 
the German state. The following table is given by von 
Scheel.^ The money is in marks. 





PRUSSIA. 


BAVARIA. 


SAXONY. 


wurtemb'rg 


BADEN. 


Interest on 












debt . . 


135*358,000 


47,642,000 


22,622,000 


17,503,000 


13,606,000 


Net revenues 












of state rail- 












roads . . 


164,685,000 


37,317,000 


27,158,000 


12,848,000 


12,181,000 



It is worth while to record the opinion of von Scheel in 
regard to state-owned and state-operated railroads, as indic- 
ative of the drift of opinion in Germany. It was a matter 
of grave doubt in 1877 whether Prussia was doing well to 
acquire private railroads. Professor von Scheel says in his 
monograph, published in 1885, that all opportunity for 
serious controversy as to the desirability of state-owned and 
state-operated railroads has now been removed by the test of 
actual experience which has decided in favor of the state in 
European countries.^ 

Municipal statistics, even in Europe, are so imperfect that 
it is possible to give only isolated facts about the revenues 
which cities derive from property and productive enterprises. 
It can be safely said that these are increasing, for nearly all 
the facts which can be gathered show a movement towards 



the Hofkalender for 1880, published by Justus Perthes. The per- 
centages are probably derived in most cases from budgets of 1879. 
Column four is derived from the monograph on " Erwerbseinkiinfte des 
Staats," by von Scheel in the 2d edition of Schonberg's " Handbuch der 
Politischen Oekonomie," Volume III., page 68. 

^ I.e., page 97. 2 i,c., page 83. 



52 INTR OD UCTION. 

increased receipts in the modem city from other sources 
than taxation. 

Paris derives considerably over twenty per cent, of its reve- 
nues from productive property. Some of this is managed 
directly, but the larger proportion by companies with limited 
charters granted under condition that all the property should 
revert to the city without compensation on the expiration of 
the charter period. In the meanwhile, these companies 
divide profits with the city of Paris. Leroy-Beaulieu thinks 
that the revenues from public property and municipal enter- 
prises will defray the greater proportion of the expenses of 
Paris before 1950, and that thereafter only a small direct 
tax will be needed. The expenditures of the city of Paris 
were about 246 milHons of francs in 1882, and of this, prop- 
erty and productive enterprise yielded about 52 millions of 
francs. The gas company, whose charter expires in 1905, 
paid about 15 millions of this sum.^ The payments by the 
company have increased, and in 1885 they amounted to 
17,499,156 francs.^ 

Rent of halls and markets yields over 7 millions of francs, 
and the abattoirs bring in an annual return of over 3 J mil- 
lions ; water-works about iii millions ; pubhc conveyances 
over 5 miUions.^ 

The budget of Leipsic, Germany, in 1886, shows receipts 
from taxes amounting to 4,218,007 marks, while rents and 
profits on property yielded the following sums : — 

1 "Traite de la Science des Finances," by Leroy-Beaulieu, 2d 
edition, Volume II., page 109. 

2 The price of gas is high; I1.45 for the 1000 cubic feet, or a little 
over 27 centimes for the cubic metre. The gas company pays 200,000 
francs for the use of the public subways. 

^ See the excellent statistical works, "Annuaire Statistique de la 
Ville de Paris." VP Annee — 1885. Paris, 1887. 



ORIGIN AND GROWTH OF MODERN TAXATION. 53 

Net profits on landed estates 156,581 marks. 

Forests 58,052 

Mills, etc 6,005 

Meadows, etc 35>668 

Chase and fisheries 3>i27 

Stone quarry ii>949 

Rents 55-967 

Total 327,349 

to which must be added estimated profits from the gas- 
works, 1,027,443 marks, which, with some other receipts, 
brings the revenues from other sources than taxation up to 
ever one quarter of all revenues. 

Nuremberg received, in 1883, from city property 151,740 
marks, and from taxes 1,600,353 marks. 

In Berlin 73.39 per cent, of expenses is paid from tax 
receipts, while the gas-works yield about 15 per cent.^ 

The increase of municipal revenues from other sources 
than taxation is seen in the statement that the gross re- 
ceipts from property and gainful pursuits in forty Prussian 
cities, with over 10,000 inhabitants each, rose from 340 
pfennige to 10 14 pfennige per capita between 1869 and 
1876, and the net receipts during the same period from 
34 to 434 pfennige per capita.^ In Prussia all the water- 
works have finally become public works, and the public gas- 
works produce over twice as much as the private gas-works, 
and these are gradually passing into municipal ownership 
like the water- works. 

In England cities have recently begun to acquire gas- 

1 A later estimate which I have seen makes the receipts from gas- 
works cover 18 per cent, of all the expenses of Berlin, Gas is sold for 
less than $1.00 a thousand. 

2 A pfennig is about one-fourth of a cent. These statistics are taken 
from Roscher's " Finanzwissenschaft," § 158. 



54 INTR OD UC TION. 

works and street-car lines. In the financial year 1883-84 
the amount of money received from water-works by munici- 
pal boroughs was ;£i,928,585 ; by urban sanitary districts, 
;£267,8io; by rural sanitary districts, ^19,166. From gas- 
works the municipal boroughs received ;£3,056,559; the 
urban sanitary districts received ;^30 7,489. From tram- 
ways the municipal boroughs received jQ^\,g^o} 

Such data as can be obtained in regard to revenues de- 
rived by American states and cities from gainful pursuits 
will be given in a subsequent part of this work. 

1 From Professor Frank J. Goodnow's paper on " Powers of Munici- 
palities Respecting Public Works." Monograph of American Economic 
Association, Volume II., No. 6. 



CHAPTER IV. 

A FEW GENERAL REMARKS ON THE WORKINGS 
OF TAXATION. 

TAXES OFTEN YIELD LARGER RETURNS THAN ORDINARY EXPEN- 
DITURES. 

TAXATION seems like a simple thing to one who has 
never reflected on its nature and consequences. 
When, however, one begins seriously to examine the finan- 
cial systems of different ages and of different countries, one 
must be profoundly impressed with the far-reaching impor- 
tance of taxation. Taxation may create monopolies or it 
may prevent them ; it may diffuse wealth or it may concen- 
trate it ; it may promote liberty and equality of rights, or it 
may tend to the establishment of tyranny and despotism ; 
it may be used to bring about reforms, or it may be so laid 
as to aggravate existing grievances and foster dissension and 
hatred between classes ; taxation may be so contrived by the 
skilful hand as to give free scope to every opportunity for 
the creation of wealth or for the advancement of all true 
interests of states and cities, or it may be so shaped by igno- 
ramuses as to place a dead weight on a community in the 
race for industrial supremacy.-^ 

There are those who claim that when the state takes ten 
dollars from me, I am simply ten dollars poorer, and that 

1 It is proper to say that some of these observations are quoted 
from one of m}' articles on " Problems of To-day " which appeared 
during the past winter in the Baltimore Sun. 



56 INTR OD UC TION. 

nothing further needs to be said on the subject. Nothing 
could be more erroneous. It makes a vast difference to me 
on what the tax is laid, when the tax is collected, and what 
is done with it. There are those who look upon taxation as 
so simple a thing that they feel warranted in laying down 
this general proposition : When money in taxes is taken 
from some of us to spend for other members of the com- 
munity, we who pay are impoverished, or, if the reader will, 
even robbed for the benefit of those who receive it. This 
is far from going to the bottom of things. Considerations 
adduced in a previous chapter show its fallacy. One illus- 
tration will show us further grounds for the view that taxa- 
tion requires careful study at this time from all citizens. I 
will give my experience in regard to taxes for educational 
purposes because it is merely a typical instance.^ I was 
educated largely at public schools, and it is doubtful whether 
I should have been able to finish my school education had 
not the schools which I attended been supported by taxes ; 
for where schools are supported by fees, these fees must be 
high in order to defray expenses if the schools are of supe- 
rior quality.^ 

My educational advantages have been of pecuniary advan- 
tage to me, while the personal satisfaction which I derive 
from them is to me beyond price. I have become a tax- 
payer, and with no children of my own at pubHc schools, I 
am helping to educate other men's children. If in the 

1 The reader will, I am sure, pardon this personal allusion. It is 
given because concrete illustrations are more readily understood than 
abstract reasoning. ' 

2 Few understand how expensive education is in modern times. 
The tuition fees of the Johns Hopkins University students have not 
covered one-tenth of the expenses. The tuition fee was at first ^8o 
per annum, and is now ^loo. 



GENERAL REMARKS ON TAXATION. 57 

course of my life I pay in taxes for schools twenty times 
what I have ever received from taxes levied for my educa- 
tion, I shall, nevertheless, think I have been well repaid, and 
shall always experience a feeling of profound gratitude for 
those who established the American pubHc school system. 
While I individually gain, the community also gains, because 
it receives back more than it has paid out. This holds 
generally with regard to wise expenditures for educational 
purposes. The chief factor in production is man, and the 
better he is prepared for industrial pursuits by suitable train- 
ing of hand and head, the larger will be the quantity of 
economic goods produced, and the more rapid the accumu- 
lation of wealth. A present burden may lessen future rates 
of taxation by increasing the taxable basis of a state or 
city.^ 

THE TENDENCIES OF TAXATION ARE VARIOUS. 

Taxation is apt to lead to interference in the business 
affairs of private individuals, and such interference tends to 
foster monopoly. Taxes laid for educational purposes tend 
to prevent monopoly, because education renders the ordi- 

1 No tax should be levied unless the money raised thereby can be 
employed better by government than by individuals. This sets the 
true limit to taxes. This idea is well expressed in the constitution of 
Pennsylvania of the year 1776. 

"Sec. 41. No public tax, custom or contribution shall be imposed 
upon, or paid by, the people of this state, except by a law for that 
purpose : And before any law be made for raising it, the purpose for 
which any tax is to be raised ought to appear clearly to the legislature 
to be of more service to the community than the money would be, if 
not collected; which being well observed, taxes can never be burthens." 

The Vermont constitution of 1777 has this same provision, probably 
copied from the Pennsylvania constitution. 



58 INTRODUCTION. 

nary man better able to protect his own interests, both as an 
individual and as a member of society. 



TAXATION AND LIBERTY. 

Is it a good thing to be taxed ? One replies, no, instinc- 
tively. Taxation in the popular mind is coupled with evil. 
It is said that only two things are certain, and those are 
" death and the taxes." Taxes no doubt are often a serious 
burden, and are frequently more disastrous in their indirect 
than in their direct effects. The preceding paragraph has 
shown that, considered from the standpoint of benefits 
conferred by the government, taxes are often beneficial. 
The benefits derived from taxes can also be seen in 
their connection with the liberty which we enjoy in mod- 
ern times. When free poHtical institutions would have 
come to the countries of Europe without taxes, is un- 
certain, but it is clear that they came largely through the 
avenue which the taxing power opened. Sovereigns found 
their ancient sources of revenue insufficient and were 
obliged to petition for subsidies which were granted under 
conditions. Again and again the sovereign found it neces- 
sary to petition for new revenues, and the estates of the 
realm continually increased their demands for concessions, 
until finally in England the lower House, through the con- 
trol over the purse strings of the nation, has become more 
powerful than the Queen and the Lords. This is one of the 
most important keys to the comprehension of modern his- 
tory. English constitutionalism has been built up on the 
taxing power from Magna Charta in 1215 until the present 
day. King John was allowed to reserve for himself the three 
customary feudal "aids" : namely, contributions in case of 
king's captivity, on the knighthood of his eldest son, and on 



GENERAL REMARKS ON TAXATION. 59 

the marriage of his eldest daughter ; but, otherwise, the 
charter reads, " no scutage ^ or aid shall be imposed in 
our realm save by the common council of our realm." 
Green says justly in his '' Short History of the English Peo- 
ple " that the English constitutional system rests on this pro- 
vision. The great Council of the Barons became the Parlia- 
ment of our day when the financial needs of the sovereign 
compelled him to give assent to the addendum to the Great 
Charter in 1294, called the statute de tallagio non conce- 
dendo, whereby it was agreed that no taxes should be levied 
by the king save with the consent of knights, burgesses, and 
citizens in Parliament assembled. Green says, '' By a change 
. . . within the Parliament itself we shall soon see the bur- 
gess, originally summoned only to take part in matters of 
taxation, admitted to a full share in the deliberations and 
authority of the other order of the state. The admission of 
the burgesses and knights of the shire to the assembly of 
1295 completed the fabric of our representative constitution." 
Parliamentary institutions were strengthened by the Petition 
of Right of 1628, and the Declaration of Rights of 1689. 
The House which drew up the Petition of Right was sum- 
moned by Charles I. when overwhelmed "with debt and 
shame," and was under the control of those who had suffered 
by resistance to arbitrary taxation. The Petition quoted 
the statutes against arbitrary taxation, loans, and benevo- 
lence, and in it the Commons prayed the king that "no 
man be compelled to make or yield any gift, loan, benevo- 
lence, tax, or such like charge without common assent by 
act of Parliament." The Declaration of Rights contained 
this statement : " Levying money for or to the use of the 
crown by pretence of prerogative, without grant of Parha- 

1 Land-tax; a commutation in money for personal services due 
under feudal tenure. 



60 INTR OD UC TION. 

merit, for loPxger time or in other manner than the same is 
or shall be granted, is illegal." The Declaration of Rights 
was followed up by annual grants of supphes — instead of life 
grants, as during the reigns of Charles II. and James II. — 
and annual renewals of the Mutiny Act, containing provis- 
ions for the discipline and pay of the army. An annual 
Parliament has since that time been a necessity, in order to 
provide supplies for the state, and to grant disciplinary 
powers for the maintenance of the army. Green speaks of 
this as " the greatest constitutional change which our history 
has witnessed." ^ It is the control of the commons over 
the revenues of the realm which now enables the lower 
House of Parliament to bring the upper House to terms, 
and even to threaten the abolition of the Lords. 

Space is too short to enable me to enter upon historical 
accounts of the connection between finance and liberty else- 
where, and it would take the reader too far from the imme- 
diate purpose of the present work. Any careful perusal of 
modern history will disclose the main facts with sufficient 
clearness. What has already been said will show that no 
political tendency is either wholly good or wholly bad.> 
Strong kings sacrificed the public domains, and unscrupulous 
ones parted with pubhc rights, rather than petition the peo- 
ple for aids and subsidies. 

To-day the careful observer of contemporary pohtics must 
feel that, were taxes on the continent of Europe no longer 
necessar)^, the painfully acquired liberties of the people 
would be in serious peril. There appears to be, however, 
no ground for apprehension in the recent increase in rev- 
enues derived from other sources than taxation, for taxes 

1 See Green's " Short History of the English People," Chapters IV. 
and IX.; Roscher's " Finanzwissenschaft," Book II., Chapter III., 
§ 53; Wilson's "National Budget," etc., Chapter I. 



GENERAL REMARKS ON TAXATION. 61 

must still yield — and so far as we can see will continue to 
yield in the future — an immense sum, and the inevitable 
burden will be as much of a check to usurpation of power 
by the sovereign as can well be provided through taxation, 
— quite as much of a check as a hea.vier burden, — while 
the necessity of resorting to taxes for all revenues might 
engender a dangerous revolutionary sentiment. If stability 
of government and peaceful evolution are desired, the in- 
creasing revenues from public works are a reassuring sign of 
the times. 

The United States government, on the other hand, illus- 
trates the disadvantages and dangers which threaten a peo- 
ple whose government derives sufficient revenues without 
recourse to taxes which are felt to be a burden. The fed- 
eral government derives larger revenues than it needs from 
indirect taxes, which many people wish to see retained for 
other than revenue purposes. Were the revenues of the 
federal government derived from direct taxes of which 
payers v/ere conscious, the whole course of Congress would 
at once be changed. It might even be questioned whether 
past experience would warrant us in expecting revenues 
large enough for the legitimate needs of government. It is 
not improbable that the situation of the federal government 
is more disadvantageous in some respects than that of a 
government which should derive its whole revenue from 
property or productive pursuits. 

It was an attempt of an English king to tax the American 
colonies, it may be mentioned in this connection, which led 
to the final outbreak between this country and Great Britain, 
and thus to the establishment of our liberties. 

It is worthy of note, also, that a free people will submit to 
a heavier taxation for purposes of which they approve, than 



62 INTR OD UC TION. 

people living under a despotism. The history of the United 
States again serves as an illustration. 



TAXATION AND SOCIAL REFORM. 

John Stuart Mill laid down the general principle that gov- 
ernments should do what they could to redress the wrongs 
and injustices of nature, and Professor Adolf Wagner of 
Berlin has developed the idea that the taxing power should 
be used as a lever for bringing about a more desirable 
distribution of wealth. Progressive taxation is one of the 
favorite devices which have been urged for this purpose. 
Limitation of the right of inheritance and bequest and 
abolition of collateral inheritances ab i?itestato have been 
urged with this in view. 

High Hcenses for the right to sell intoxicating liquors 
are advocated as a means of social reform. The land- 
tax scheme of Henry George has been described as simply 
reform in taxation, and it may be so considered, although, 
as already explained, he does not grant the existence of a 
general right of taxation. Thucydides said he was a dan- 
gerous citizen who gave no attention to politics. When one 
considers the tremendous importance of taxation, one feels 
inclined to call him a dangerous citizen who gives no atten- 
tion to the principles of taxation. 



CHAPTER V. 

THE DIFFERENT KINDS OF TAXES. 

CLASSIFICATION OF TAXES HAS BECOME IMPORTANT. 

WHAT has been said in previous chapters shows the 
small importance which could be attached in early 
ages to a classification of taxes. It was then sufficient to 
mention the few taxes which existed, and to describe them. 
Possibly it is only in this century that nations, states, and 
cities have had what may fairly be termed classes of taxes. 
There are now, however, taxes of so many sorts that one 
will find it impossible to understand taxation unless the 
different kinds are arranged in subdivisions and these char- 
acterized by their main features. The richness and fulness 
of modern industrial life render it like the natural world in 
complexity, and the student is forced to resort to similar 
methods in his investigations. 

THE CLASSIFICATION OF THE PHYSIOCRATS. 

Jean Bodin speaks of direct and indirect taxes in his 
work, "Six Livres de la Republique"; but this distinction 
appears to have been made familiar by the teachings of the 
French economists, the Physiocrats^ of the last century. 
The Physiocrats taught that land was the only source of new 
wealth ; and agriculture, consequently, the only truly produc- 

1 The three most prominent Physiocrats were Quesnay, Gournay, and 
Turgot. 



64 INTR OD UC TION. 

tive pursuit. Agriculture yielded, so they taught, not only 
returns on labor and capital, but a surplus or rent. This rent 
they called the produit net — net product. Now as this 
produit net, or rent, was the only source whence additions to 
existing wealth could come, they endeavored to show that 
all taxes must of necessity be paid out of rent. If they 
were laid on persons, pursuits, or commodities, they would 
be simply shifted to the landowner. They advocated, 
therefore, a single tax on the rent of land, and this tax they 
called direct, because it was at once paid by the tax-bearer. 
All other taxes were called indirect, because they were 
shifted, and were ultimately paid by a person who did not 
in the first instance pay them — or, more properly speaking, 
advance them. The distinction which the Physiocrats 
made has become the generally accepted principle for clas- 
sification both in the practical administration of public affairs, 
and in science. Taxes, it is generally stated, are direct 
which are borne ultimately by the one upon whom they are 
in the first instance laid, while taxes are called indirect when 
they are paid by one person and by him shifted to another. 
Those taxes which the Physiocrats considered indirect have 
since their time been held to be partly direct and partly in- 
direct ; for subsequent writers have entertained different 
views about the incidence of taxes — the technical phrase 
which refers to the real as opposed to the nominal payment 
of taxes. ^ 

OTHER CLASSIFICATIONS. 

No economic writer now believes that a tax on rent is 
the only one not shifted. The incidence of taxation has, 

1 Fawcett's definition. The real or ultimate payment of taxes is also 
discussed under the technical terms, the shifting of taxes, or the reper- 
cussion of taxes. 



DIFFERENT KINDS OF TAXES. 65 

however, long been a subject of controversy, and the distri- 
bution of taxes between the two classes must vary with the 
ideas of different writers on this topic, provided the old 
principle of classification is retained. This distribution 
must also change with every new theory respecting the 
incidence of taxation. The observation of the uncertain 
character of this classification has recently led to search for 
new principles for classification. Some scholars have adopted 
new terms for the main kinds of taxes, while others have 
retained the old terms, but have defined them differently. 
It may be well to consider one or two classifications. 

Professor Rau of Heidelberg divided all taxes into as- 
sessed taxes and expenditure taxes. Assessed taxes were 
defined as taxes levied on the basis of an assessment or 
valuation. The object taxed is assessed or valued. Ex- 
penditure taxes were defined as taxes levied on articles of 
consumption, such as food, clothing, and the like ; or liter- 
ally, " taxes levied on account of a transaction in which an 
individual manifests an intention of undertaking a consump- 
tion." 

It may be objected to this classification that it is not 
sufficiently inclusive, and also that it does not direct atten- 
tion to the main features of the two taxes. Many stamp 
duties ^ could not be well included under either class, and 
taxes on commodities are after all frequently based on an 
assessment of the object taxed. 

Senator Sherman, in a speech on the income tax in the 
United States Senate in 1871,^ incidentally divides taxes 

1 Stamps on checks and bills of exchange could not be included. 
It is also difficult to tell how many of our license taxes could be brought 
within either class. 

2 January 25. See his " Speeches and Reports on Finance and Tax- 

aMnn." New XoxV, 1879- 



66 INTR OD UC TION: 

into these two classes : taxes on possessions, and taxes on 
consumption. The same objections would hold against 
this classification, and in addition it may be said that a dis- 
tinction ought clearly to be made between property and 
income. 

The distinction between direct and indirect taxes ought 
to be retained, if possible, as it has been so universally 
introduced ; but each kind of taxes should be so defined as 
to separate it clearly from the other, and so as to make it 
correspond to well-known facts rather than more or less con- 
jectural theories. The recent efforts to define direct taxes 
and indirect taxes with more precision seem, therefore, to 
be a move in the right direction, and two of these defini- 
tions are worthy of note. 

Paul Leroy-Beaulieu in his " Traits de la Science des 
Finances," gives this definition : " Direct taxes are those 
which the legislator intends should be paid at once and 
immediately by him who bears their burden. They strike 
at once his fortune or his revenue, and every intermediary 
between him and the treasury is suppressed, and a rigorous 
proportionality is sought between the tax and his fortune or 
abihty to pay taxes." 

Indirect taxes, on the other hand, are defined by Leroy- 
Beaulieu as " those which the legislator does not intend should 
be paid at once and immediately by him who bears their 
burden, and he does not seek to proportion them to his 
revenues or fortune. The legislator seeks to lay them on 
the one who it is intended should bear their burden in a 
roundabout way. Intermediaries are put between him and 
the treasur}\" 

The income tax, land tax, and tax on personal property, 
on successions and gifts, and on horses and equipages, are 
included under direct taxes, while taxes on commodities, 



DIFFERENT KINDS OF TAXES. 67 

stamp duties, and fees for registering or recording legal docu- 
ments are by this definition placed among the indirect taxes. 

It may again be objected that the intention of the legis- 
lator is too uncertain an element for the characterization of 
a scientific conception, while the facts in regard to the 
repercussion of taxation are often uncertain. Was the tax 
of two cents formerly laid on bottles of patent medicine 
which sold at retail for fifty cents, paid by the consumer 
or manufacturer? Which one did the legislator seek to 
relieve when he removed the tax? 

Professor Knies gives the following definition, which seems 
to me preferable : " Direct taxes are taxes which are based 
on an assessment of a person's property and business, or 
bear directly on the person of the tax-payer. Indirect taxes 
are taxes not based on such an assessment, but taxes which 
are levied when the existence of a taxable object, or source 
of taxes (productive property) , is presumed from other evi- 
dence than that of direct assessment or valuation." ^ 

This definition characterizes taxes according to the source 
whence the power to pay them is derived. Land is taxed 
because it yields an income and a tax can be paid out of 
this income. It is the source of the tax. A carriage horse 
kept for pleasure is not a source of income, but it is pre- 
sumed that the owner of the horse has an income out of 
which the tax may be paid. The existence of a source of 
taxes -is inferred from an evident fact. This is similar to the 
principle on which the Physiocrats based their classification. 
The direct tax, according to both the Physiocrats and Knies 
is that laid on the source of the tax. 

The essential point, as I take it, is not whether the tax is 
paid directly or indirectly by the one who bears the burden, 

1 Translated from my manuscript notes on Knies's lectures. 



68 INTRODUCTION. 

important as that is in many ways, but the nature of the 
economic goods on which the tax is laid should be made 
decisive in separating taxes on things, and then other taxes 
may advantageously be grouped about these. 

Taxes on real property and on incomes are by general 
consent direct taxes. Property and income are assessed 
and taxes are imposed according to some rule of propor- 
tion, but income and property are not necessarily taxed in 
the same proportion.-^ 

Indirect taxes are taxes on articles of food, drink, and 
clothing, or articles of consumption, or, as is most frequently 
said in America, on commodities. An accessory circum- 
stance is, that they are, as a rule, paid by a dealer who adds 
the tax paid with a profit to the price of the article. This 
does not invariably happen, for sometimes the dealer is so 
situated that he must bear the tax, although it is obviously 
the intention of the legislator in most cases that he should 
shift the burden. When I import my own books, however, 
the tax I pay on their value is as truly indirect as when I 
purchase the books of a foreign dealer ; but I usually save by 
doing so, because I am not then obliged to pay a profit on 
the duty. When a Parisian brings food into the city oj 
Paris, it is taxed by the municipal authorities, and the tax is 
an indirect one whether the food is designed for his own use 
or for sale. This definition includes customs duties and in- 
ternal revenue taxes, which are mainly thought of by the 
economist when he uses the term indirect taxation. 

The indirect system of taxation arose when Parliament, in 
the reign of Charles II., " divested the landed gentry of all 
feudal obligations to the crov/n, without touching their privi- 
leges," and replaced these obligations by taxes on beer, 

1 Zurich and Basel have different rates, for example. 



DIFFERENT KINDS OF TAXES. 69 

wine, tobacco, and spirits.^ These were all taxes on articles 
of consumption. 

The definition of direct taxes may now be completed by 
adding other taxes which it has generally been agreed to 
call direct, and which will be found to have certain charac- 
teristics in common, as, for example, that they imply a list 
of taxable persons, natural and artificial, and that they are 
proportioned more nearly to the ability of the tax-payer than 
can well be the case with indirect taxes. Sometimes direct 
taxes carry with them the assessment of all a man's fortune, 
more often of his total income, and perhaps still more fre- 
quently, the valuation of all of certain species of property ; 
whereas indirect taxes are specific, a fixed charge for an ob- 
ject without assessment, as so much a pound for sugar ; or 
the single object alone is valued and taxed without reference 
to the value of other property which the tax-payer or tax- 
bearer may or may not have. I would then give this as a 
definition of direct taxes. 

Direct taxes are taxes on trades (including any branch of 
business), on pursuits, on property consisting of other eco- 
nomic goods than articles of consumption, and on income. 

This definition includes taxes on articles of luxury, such 
as dogs, horses, carriages, and also on successions and gifts. 

Indirect taxes, on the other hand, are taxes on articles of 
consumption, or on commodities, as that term is now usually 
understood, and also taxes levied on occasion of certain 
transactions, as the payment of money by check,^ or the re- 
cording of deeds or mortgages. The following table will help 
the reader to understand this classification, and also the 
various subdivisions of these two classes : — 

1 Wilson, " National Budget." 

2 Formerly in the United States. 



70 



INTR on UCTION. 






* 5 3 

2 S fl 



^11 






— i5-«§ 



— >^ u o 



^•s.a 









1^ 





CO >• 


a 


>^3 


P3 


r^-s 




^.i 




KJ--^ 




U^->. 




3^ 


>i 


l^s 


4J 


o"S 


o. 


-s s 



s s 



"si 



Pi I 



DIFFERENT KINDS OF TAXES. 71 

Direct taxes are divided into two main sub-classes : 
namely, real and personal taxes. It is to be noticed, 
however, that these terms are not used with the meaning 
which is current in the United States. Real taxes are taxes 
on things, as the word real {res) signifies. A tax on land is 
an example. It is a certain charge resting on the land, 
and has no reference to any particular owner. Land in 
Baltimore in the year 1887 was taxed for state and city pur- 
poses ^i.78f on the ^100 of valuation, and the personality 
of the owners was not at all involved. One owner of land 
in the city might be able to obtain two or three times as 
much from land worth ^1000 as another, but this fact could 
not be brought into consideration by the assessors. One 
owner might be largely in debt for the land, while others 
owned their land free from obligations ; but this likewise was 
not a question involved. Business taxes are also regarded 
as real taxes, as they are taxes on pursuits. The more 
prominently the personal element is brought forward, the 
closer the resemblance to a personal tax. When each per- 
son engaged in a given occupation is charged a certain sum 
per year, no consideration of the personal element enters 
into the tax. This may also be said of a tax based on cap- 
ital employed or rental value of premises. Things are taxed 
— using the word things in the broadest sense so as to in- 
clude transactions and occupations. When the personal 
abihty of the merchant or physician, as formerly in the New 
England colonies, was estimated, and this was allowed to 
influence the amount of the tax, it in so far approached the 
nature of a personal tax. 

Personal taxes are, then, taxes on persons. An income 
tax is the chief of personal taxes, now that poll tax or capi- 
tation tax is generally held to be antiquated, and has been 
abolished in most places. A man's income is taxed, re- 



72 INTR OD UC TION. 

gardless of its source, in a properly constructed income tax. 
It may come from lands, houses, bonds, or pursuits, but 
this is of no consequence. A person from one source and 
another derives an annual revenue. It is something which 
gathers about a person. It is properly called a personal tax. 

This distinction is of great practical importance. A tax 
on land can have no reference to a mortgage, because it is 
a charge on a thing, and the fact that the land is mortgaged 
is a personal matter. The mortgage may, however, with 
propriety be exempted from taxation on the ground that it 
and the land together represent but one source of taxes ; 
and also on other grounds which will be discussed hereafter. 
An income tax allows, on the other hand, a deduction of 
interest paid on the mortgage from income, because that 
lessens income. Income is what is left after business ex- 
penses are paid. Personal expenses, like house-rent, may 
not with propriety be deducted from income before it is 
taxed, because income exists for the sake of personal 
expenditures. 

Taxes on property are di\dded into taxes on immovable 
and movable property, called in the United States real ^ 
and personal propert)^ respectively. 

Business taxes are assessed taxes when they are a percent- 
age on a valuation, as, for example, a certain percentage on 
all the capital employed in a business. They are the ordi- 
nary licenses, when they are a fixed charge for the privilege 
to pursue an occupation. This is common in the southern 
states, and they are often graduated with reference to the cap- 
ital employed, as in Maryland, where business men are roughly 

1 Or real estate. " Real estate for the purposes of taxation shall 
include all lands within this state and all buildings and other things 
erected on or affixed to the same." " Public Statutes of Massachu- 
setts," Title III., Chapter XL, § 3. 



DIFFERENT KINDS OF TAXES. 73 

divided into a few classes according to the amount of their 
stock and the license graded accordingly. The licenses are 
specific and not a percentage charge, and vary from ^12 
to ^150 for those '' who barter or sell goods." 

A franchise tax is a tax on a franchise for a corporation. 
This is not a tax on capital or on real estate, and does not 
exclude additional taxation. It is payment for a privilege.' 
A franchise tax has become a popular form of taxing rail- 
roads in the United States, and is usually a percentage of 
gross receipts which varies with the amount of gross receipts 
per mile. 

Indirect taxes are either taxes on goods manufactured or 
produced at home for home consumption, or taxes on com- 
modities entering the home market or leaving it, or taxes 
levied on occasion of certain transactions. Internal revenue 
taxes are national in America, as they are levied by the 
federal government. The chief commodities subject to these 
taxes are intoxicating liquors and tobacco in its various 
forms. The states are unable to make use of their taxes, 
first, because the federal government has made use of them, 
and has, as it were, already occupied the ground; and second, 
because taxes laid on commodities produced or manufactured 
in one state would tend to drive the business to another, and 
our states are forbidden by the federal constitution to protect 
themselves by taxes laid on their frontiers as a counterpoise. 
Elsewhere, however, certain taxes on commodities may be 
found within states, and on the continent of Europe it is 
common for cities to raise revenue on food products when 
brought into the cities. Cities like Paris are for this purpose 

1 So decided in Maryland by the Court of Appeals, which declares 
that "there is a distinction between a tax on property and on fran- 
chises." State V. Philadelphia, Wilmington, & Baltimore Railrond, 45th 



74 INTRODUCTION. 

surrounded by a line of little taxing-stations — miniature 
custom houses, as it were. 

Customs duties may be laid on goods leaving the country, 
and are thus laid in Brazil, some of the West India Islands, 
and elsewhere. Customs duties are by the federal consti- 
tution limited in the United States to duties on imports. 

Taxes are levied when certain transactions take place, in 
particular when property changes hands. Charges are ex- 
acted for recording deeds, mortgages, assignment of leases,- 
release of mortgages, etc. Court charges fall likewise under 
this head, as well as stamp duties on checks, bills of exchange, 
promissory notes, and many other documents.^ 

Modem writers on finance use the word fee as a special 
return made by an individual for a special service on his 
behalf performed by public authority, when the service, 
although rendered for the sake of the general public, con- 
veys a special advantage to the one who is asked to make a 
contribution, provided the fee does not exceed the cost.^ 
The services rendered by civil courts serve as an illustration. 
One who maintains his rights in the courts is supposed to 
confer an advantage on the public. A question which my 
neighbor has settled for himself in the courts may save me 
the expense of a long and tedious htigation. As the one 
who calls for the services of the court, however, is supposed 
to derive a particular individual advantage therefrom, it is 



1 Most stamp duties in America have been gradually abolished since 
the Civil War. 

2 " Fees (^Gebiihren) are receipts from individuals to cover part of 
the expenditure of the state on account of a service, which, although 
performed in the interest of the general public, conveys a special ad- 
vantage to said individuals." — Carl Knies. 

" Fees are a special counterservice in return for a service of the 
state." — Adolf Wagner. 



DIFFERENT KINDS OF TAXES. 75 

held to be right that he should be asked to make a special 
contribution.^ Fees may cover cost or only partially cover 
cost ; but when they yield a profit, they should be regarded 
as an indirect tax. Fees have often assumed this character, 
and have been an obstacle in the way of certain transac- 
tions, like conveyances of land,^ which has been of great 
injury. High charges for the services of the judicial authori- 
ties have been condemned by John Stuart Mill and others, 
because they render legal protection a farce for all save the 
wealthy. 

What is levied in the form of a tax on a transaction may 
really become a direct tax. Should a charge for recording 
a deed vary in proportion to the value of the estate trans- 
ferred, this would amount to a direct tax on occasion of 
change of ownership. 

Fees for patents at Washington more than cover the cost 
of the Patent Office, and to the amount of this excess it 
may be said that charges for patents are an indirect tax, for 
the Patent Office is not managed for the sake of the individ- 
uals who apply for patents, but primarily for the public 
good. 

Fees have, in great cities in this country, yielded enor- 
mous returns. It is said that a single office in Philadelphia 
was a few years ago worth ^100,000 a year to the man who 
held it, on account of fees, and rumor told us of offices in 
New York City worth ^50,000 and ^75,000 a year. There 
has been a general movement in the direction of fixed sal- 
aries in cities in place of payment by fees,^ and fees are then 

1 The fact that the loser often pays the " costs," or fees, has nothing 
to do with this. They are often transferred to him as a sort of penalty. 

^ In England, for example. 

^ The constitution of Maryland renders this compulsory, save in a 
few cases. 



76 INTRODUCTION, 

turned into the public treasury. When they exceed the 
charge necessary to defray the expenditure incurred on ac- 
count of a special service rendered, they are an indirect, and 
too often an onerous tax. 

AD^nXISTRATR'E CLASSIFICATION OF TAXES. 

Taxes are in official statements frequently divided into 
direct and indirect taxes, but the classification has generally 
been governed by motives of convenience rather than by 
scientific principles. The taxes were first divided into di- 
rect and indirect, no doubt because it was supposed that 
taxes of the first kind were borne by ' the payer while the 
latter were shifted by the payer to the shoulders of some one 
else. Afterwards, however, taxes were often called direct, 
simply because their management was assigned to those who 
had charge of the direct taxes, and taxes were called indirect 
because under the management of those who had charge of 
the other indirect taxes. 

Paul Leroy-Beaulieu finds that the following definition 
holds for the administration in France : " Direct taxes bear 
immediately upon persons and upon the possession or the 
enjoyment of wealth. They are levied regularly, and not on 
special occasions." 

" Indirect taxes are levied on occasion of a deed, an act, 
or an exchange. They are also levied on occasions which, 
to the payer, are irregular and unusual." 

Leroy-Beaulieu very properly objects to this classification, 
that things are placed together which in their nature are 
essentially different. Taxes on successions and gifts are 
classed as indirect taxes, although they are like other prop- 
erty taxes in effect, and in their workings unlike taxes on 
wheat, salt, and potatoes, with which they are classed by the 
administration. 



DIFFERENT KINDS OF TAXES. 77 

Each country will be found to have its own peculiarities, 
and it will probably be found everywhere that the grouping 
has been more or less haphazard/ 

The American federal classification is indeed a strange one. 
The constitution provides that " representatives and direct 
taxes shall be apportioned among the several states in pro- 
portion to population." It has been held that by direct 
taxes are meant only taxes on real estate and on slaves ; 
consequently an income tax was imposed by Congress during 
the late Civil War, and was regarded as an indirect tax ! 

OTHER MODES OF CLASSIFICATION. 

Taxes have been divided into kinds with respect to the 
object or person taxed, or the event which is made the ex- 
cuse for a tax or charge. They may be divided from other 
standpoints. A tax may be proportional, progressive, re- 
gressive or digressive. 

A tax is proportional when it takes a constant percentage 
of the thing taxed. A tax is progressive when the rate of 
taxation increases as the value of the property or income 
taxed increases. A tax of one per cent, on all incomes is 
proportional ; a tax of one per cent, on incomes over one 
thousand and less than two thousand, and of two per cent, 
on incomes over two thousand, is progressive. The pro- 
gression may continue indefinitely or it may stop at a cer- 
tain percentage. A tax is regressive when the rate per cent, 
increases as the property decreases. This is the case with 
business license taxes in Mar)^land. 

A tax is digressive when a certain sum is exempt from 
taxation, and the excess, above a certain sum, is taxed at a 

1 Schonberg, *' Handbuch der Politischen Oekonomie," 1st edition, 
Volume II., page 150. 



78 INTR on UC TION. 

uniform rate. An income tax of one per cent, on all 
incomes in excess of ^600, and only on that excess would 
be called digressive. It is slightly progressive. It is, for 
example, one-half of one per cent, on an income of ^1200, 
and two-thirds of one per cent, on an income of ^1800. As 
the progression is so slight, it is called digressive, not pro- 
gressive. It has also been called progressional.^ 

Certain designations, like ordinary or regular and ex- 
traordinary taxes, are sufficiently defined by the terms 
employed. 

Taxes may be divided into apportioned and percentage 
taxes. Apportioned taxes are taxes which are distributed 
among various political units, such as states, counties, towns, 
and cities. Direct federal taxes serve the purpose of illus- 
tration. As just mentioned, they must be distributed among 
the states in proportion to population, and the percentage 
must be determined afterwards by the states. County and 
state taxes are apportioned among the towns in New Eng- 
land, although this apportionment is based on a previous 
valuation of property. 

Taxes in Maryland are percentage taxes. A certain rate 
is levied on all property in the state, and collected, without 
any apportionment among the local political units .^ It will 
be noticed that in the case of the apportioned taxes, the 
amount to be collected is determined in«advance, whereas 
the percentage may vary more or less. The percentage 
taxes, on the other hand, yield a more or less uncertain 
amount, while the percentage is invariable. 

1 See Walker's " Political Economy," 2d edition, Part VI., Chapter 
XVI. 

2 The German expressions are Repartitionssteuern and Qtioiilats- 
steuern ; the French, impots de repartition and impbts de qtialite. 



CHAPTER VI. 

DIRECT AND INDIRECT TAXATION COMPARED.^ 

INDIRECT TAXES ARE CHIEFLY TAXES ON COMMODITIES. 

INDIRECT taxes are for the most part taxes on commod- 
ities ; in other words, on what we eat and wear and 
consume in other ways, or on raw materials and implements 
used in manufacturing goods for purposes of consumption. 
They are called indirect taxes because they are usually paid 
in the first instance by one person and shifted by him to 
another. The importer of salt, sugar, and coal pays taxes 
on these commodities when they enter the territory of the 
United States, adds them to the price of his commodities, 
sells them to some one else, perhaps a wholesale dealer, 
who in turn disposes of them to a retailer, having added 
the tax and a profit on the money which he advanced in 
payment of the tax. The retailer finally sells them to you 
and me, but by this time the tax has been turned over sev- 
eral times, and has grown like a snowball rolling down hill. 
To the retailer the tax has become an indistinguishable part 
of the price which he pays, and on which he must derive 
a profit from us, the consumers. Thus indirect taxes roll up, 
and roll up every time one person shifts them upon another, 
until finally the augmented burden rests upon the shoulder 
of the real tax-payer. An indirect tax is thus a tax which 

1 It is proper to say that a considerable portion of this chapter has 
already appeared in the Baltimore Sun as an article in my series 
entitled " Problems of To-day." 



80 introduction: 

violates one of the celebrated four canons of taxation ; for 
it takes from the pockets of the tax-payer far more than it 
puts into the public treasury. It is a wasteful kind of taxa- 
tion. This is not '•' mere theory." It is a fact of which 
any one can satisfy himself by conversation with intelligent 
merchants who understand the operations in which they 
are engaged. 



INDIRECT TAXES VIOLATE THE PRINCIPLE OF EQUALITY. 

Another accepted canon of taxation is, that its amount 
should be measured in each case in proportion to ability 
or the revenue which a citizen of the commonwealth enjoys. 
This is what is called equality of taxation. Government 
should exact equality of sacrifices of us all. An income 
tax honestly assessed and honestly collected meets the re- 
quirements of this canon. How does the case stand with 
indirect taxation ? This is taxation of consumption ; but 
does consumption of taxed commodities vary with income ? 
We import salt and tax it nearly fifty per cent, of its value. 
Does the rich man consume more salt than the poor man ? 
Do you increase the amount of salt in your soup Avith an 
improvement in your financial condition? It is said that, 
on the contrary, the amount of salt consumed by the poor 
man is greater than that consumed by the rich man, be- 
cause the latter uses other condiments, while salt is often 
the only seasoning the former enjoys. We have in a tax 
like this what is called a regressive tax, a tax which increases 
as income decreases — the worst kind of a tax and the most 
unjust. The tax on sugar is over seventy- five per cent, on 
value, and from it a large part of our revenue is derived. 
It is similar in principle, although there is a difference in 



DIRECT AND INDIRECT TAXATION COMPARED. 81 

rates according to value of sugar, so that higher grades pay 
more, and it is true that people of large means consume 
more than poor people. But the difference in rate and 
in quantities consumed by no means corresponds to differ- 
ences in incomes. It may be doubted whether a man with 
ten thousand a year consumes less than one with fifteen 
thousand, and he certainly does not consume an inferior 
quality of sugar. A man with two hundred thousand a year 
will not consume twenty times as much as one with two 
thousand a year, much less will he consume one hundred 
times as much. Here we still have the regressive tax. But 
take even the tax on silks imported, which yields fifteen mil- 
lions a year, and appears to be one of the fairest of indirect 
taxes. The rate is almost fifty per cent. Silk can hardly 
be called an article of superfluous luxury at the present time, 
and a lawyer who supports a family on three thousand a year 
is taxed out of all proportion higher than the plutocrat whose 
income is three hundred thousand dollars. It is needless 
to continue illustrations. With the progress of democratic 
thought, the idea of progressive taxation meets — rightly or 
wrongly, that need not be discussed here — with increasing 
favor ; and some of the states where the principles of de- 
mocracy are carried farther than anywhere else in the world, 
the Swiss cantons, have recently introduced progressive taxes 
on property and on income, but our federal government relies 
wholly on a system of regressive taxation. 

But this is not all. Take up any treatise on taxation and 
read the arguments in favor of indirect taxation, and what 
is the first thing to attract attention? It is that with the 
present calls upon civilized governments, and with the un- 
willingness of people to pay direct taxes, and the resistance 
which men of means offer to high direct taxes in propor- 
tion to income, it is practically impossible to maintain the 



82 INTRODUCTION. 

modern government without large contributions from people 
of limited resources, and the only way to tax them is by 
indirect methods ; in other words, mingling taxes with prices 
paid, so that goods cannot be bought without paying taxes. 
It is, too, worthy of notice that the English system of indi- 
rect taxation which we have inherited originated in the cor- 
rupt reign of Charles II., about two hundred years ago. 
Then the burden of government rested upon the land held 
by feudal tenure, but the Parliament of Charles II., " by a 
majority of two only, divested the landed gentry of all 
their feudal obhgations to the crown without touching their 
privileges, and as compensation to the state imposed an 
excise duty upon beer, spirits, wine, tobacco, and numerous 
other articles. ... It marked the dawn of our modem 
system of indirect taxation ; and the emancipation of the 
aristocracy from special burdens on land thus accomplished 
helped to alter the whole current of our later fiscal history." 
These are the words of an English writer on finance.^ 



INDIRECT TAXATION AND PAUPERISM. 

There is a connection between indirect taxation and pau- 
perism which is worthy of notice. All direct taxation places 
a limit below which it will not go, usually varying in 
American states between one hundred and five hundred 
dollars ; in other words, property of a lower v-aluation is 
not taxed. 

Indirect taxation does not discriminate between the last 
dollar of the poor widow and the dollar which is only one 
in an income of a million. It raises prices, reduces the 

1 "The National Budget, National Taxes and Rates," by A. J. Wil- 
son in the " P^ng'ish Citizen "' Series. 



DIRECT AND INDIRECT TAXATION COMPARED. 83 

value of income, and forces some who are already near the 
awful line of pauperism to cross it, and thus puts to death 
higher aspirations in a class of citizens and lowers the level 
of civilization. But the absurdity of the thing is seen in 
this, that when the tax has destroyed the value of a man as 
an industrial factor in the community, what is taken away is 
given back in alms ! 

INDIRECT TAXES OBSTRUCT TRADE. 

The cost of collection of indirect taxes is high, and ne- 
cessitates an army of spies and informers. They thus inter- 
fere with liberty of movement and obstruct trade in a thou- 
sand ways. Thus, again, indirect taxes take out and keep 
out of the pockets of the people more than they yield to 
the treasury of the state. 

INDIRECT TAXES AND MONOPOLY. 

It may be laid down as a general proposition applicable 
to all modern nations, that indirect taxes have been found 
to promote the tendency of business to concentration in a 
few hands, and this is one of their most unfortunate effects. 
This also explains the strange phenomenon of men asking 
to be taxed. 

The tobacco manufacturers and the whiskey distillers de- 
sire to see the present indirect federal taxes on the commod- 
ities which they produce retained, while the manufacturers 
of matches, who had secured a monopoly, sent a lobby to 
Washington to work — fortunately without effect — against 
the repeal of the taxes on matches in 1883. 

The reasons why indirect taxes favor those manufacturing 
on a large scale are many. A discount, for example, was 



84 INTRODUCTION. 

given to manufacturers of matches in the United States, 
who bought the stamps which were affixed to the boxes in 
payment of taxes, provided they bought in large quantities, 
and it increased with the quantity purchased. If they fur- 
nished their own design for the stamp, the Commissioner of 
Internal Revenue was authorized to give five per cent, dis- 
count on amounts of not less than fifty dollars and not over 
five hundred dollars, and of ten per cent, on amounts over 
five hundred dollars, when purchased at one time, and — 
as if to make the tendency to monopoly irresistible — a 
credit of sixty days was specially given to those manufac- 
turers of matches who could offer satisfactory security for 
payment. Formerly it was a simple matter for any one to 
manufacture matches in a small way in the home or a little 
shop, but the entire business fell into the hands of a monop- 
oly. Similar discounts were allowed to manufacturers of 
other articles on a large scale.^ While this discount is not 
a necessary feature of indirect taxation, this instance is given 
as an illustration, for regulations for the collection of taxes on 
commodities will almost invariably contain some features 
which favor the large manufacturer or dealer. 

It is a simple thing to manufacture cigars and cigarettes 
and other tobacco products, and the business of manufac- 
turing cigars ^ and tobacco was formerly carried on all over 
the country, and it was practicable for every Southern planter 
to combine the business of tobacco manufacturer with that 
of farmer. It required only a board, a knife, a little paste, 
and a few simple implements to start the business. Now 
bonds must be given for payment of tax, business must be 
done according to prescribed methods, and books must be 

1 See " Revised Statutes of United States," Title XXXV., Chapter X. 

2 Cigarettes have only recently been made in great quantities in the 
United States. 



DIRECT AND INDIRECT TAXATION COMPARED. 85 

kept, to say nothing of the discount on stamps, all of which 
favors the large dealer. The larger amount of capital 
required is a further obstacle in the way of the "small man " 
engaging in business for himself. Thus it has happened 
that a few large manufacturers have absorbed the bulk of 
the business in the United States, and now object to a 
removal of the taxes which they pay. 

Coal brought into Paris for manufacturing establishments 
is not subject to the indirect tax, called the octroi, provided 
it is purchased in large quantities ; for if the exemption 
were granted to small lots, it would not be possible to dis- 
criminate between coal designed for manufacturing purposes 
and that intended for household use.^ It will thus always 
happen, from the necessities of the case, that taxes on 
commodities will, in the one way and the other, promote 
monopoly. 

INDIRECT TAXES CONGENIAL TO DESPOTISM AND ARISTOCRACY. 

Indirect taxes are imposed on people without creating so 
much discontent as direct taxes and without occasioning so 
close a scrutiny of the method in which the proceeds of 
taxation are expended, because the mass of men do not real- 
ize that they pay taxes every time they purchase dry goods or 
groceries. Indirect taxes are an underhanded kind of taxa- 
tion. It is not, then, surprising that they are in the minds of 
many identified with despotism and aristocracy, while there 
is a growing opposition to them on the part of enlightened 
democracy — an opposition which undoubtedly goes too far 
at times. In the United States, it should be remembered 

1 Roscher, " Finanzwissenschaft," Book III., Chapter III. It is also 
said in the same place that the taxes on glass led to a monopoly in 
England. 



86 INTR OD UC TION. 

that, while national revenues flow from indirect taxes, state and 
local governments are almost entirely supported by direct tax- 
ation. National revenues are about as large as the revenues 
of all the states and all the local political units put together, so 
that we pay about one-half of our total expenses of govern- 
ment by the proceeds of direct taxes, and about one-half by 
the proceeds of indirect taxes.^ There would be great op- 
position to an extensive system of direct federal taxes, be- 
cause the face of the federal tax-gatherer in our states is not 
a welcome sight. Of course he is now everywhere, but he 
keeps out of sight of most of us, and so we do not realize 
it. A good deal of this feeling against direct taxes has been 
properly called "puerile," and among a people sufficiently 
moral, patriotic, and enlightened, indirect taxation might 
perhaps be abolished. We must, however, take people as 
we find them, and at present its total a'bolition is out of the 
question. Of course, it is an undoubted advantage to be 
able to pay one's taxes in small amounts from time to 
time, when one buys a few pounds of sugar, a little tobacco, 
or an article of clothing. Our indirect federal taxes are of 
two kinds, — tariff duties and internal revenue taxes : the 
former laid on commodities imported into the country ; the 
latter, on commodities produced within the country. Now 
there is a peculiarity about the revenues which flow from taxes 
on imported commodities, and that is, that those taxes are, 

1 The census of 1880 gives the total amount of state and local taxes 
at $312,750,721, while the total net ordinary receipts of the federal gov- 
ernment in the year ending June 31, 1880, were $333,526,610.98, but 
only $312,531,438.52 were from customs and internal revenue. Other 
receipts were from public lands and " miscellaneous sources." It is 
probable, however, that in the census estimate of state receipts from 
taxation, other sources of state and local revenues are included in 
some cases, and these other sources yield a considerable portion of the 
revenues in some states. 



DIRECT AND INDIRECT TAXATION COMPARED. 87 

in the United States, not laid for the sake of revenue, but for 
quite another purpose. The aim of the tariff taxes is to ren- 
der it more difficult to bring commodities into the United 
States, and thus either to remove competition from those 
Americans engaged in the production of commodities which 
some of us want to import ; or, at any rate, to serve as a 
breakwater, and to modify the power of competition. The 
revenue which these taxes afford is an incidental matter. 



DIRECT TAXES PROMOTE GOOD CITIZENSHIP. 

Direct taxes are perceived by tax-bearers as well as tax- 
payers.^ When a man is accosted by the tax-collector with 
a demand for a tax of two per cent, on the selling value of 
his house, his attention is thereby called in a most emphatic 
manner to the operations of government, and increased ex- 
penditures, involving an additional burden of taxation on 
lands, houses, or income, promote an inquiry into these oper- 
ations and a watchfulness over them. 

Indirect taxes, on the other hand, are borne by the ordi- 
nary man as an indistinguishable part of the price of com- 
modities, and he is not always sure that he is paying any 
tax. Sometimes a reduction of the tax does not produce a 
fall in the price of commodities ; and although this is excep- 
tional,^ the chance that changes in the rate of taxation may 

1 Where a distinction is made between tax-payer and tax-bearer in 
this book, tax-bearer is used to indicate the one upon whom the tax 
ultimately falls, while the tax-payer is the one who pays the tax in the 
first instance. If the tax-payer is unable to shift the tax, he is also 
the tax-bearer. 

2 The abolition of the federal tax of one cent on the ordinary small 
box of matches in 1883 led at once to a fall in retail prices in Baltimore 
more than equal to the tax removed. Six boxes, which formerly sold 
for fifteen cents, were thereafter sold for six. 



88 INTR OD UC TION. 

not affect him tempts the average citizen to become careTess 
and indifferent about taxation, and consequently about the 
operations of government. One of the most marked and 
most important distinctions between direct and indirect tax- 
ation is that the former tends to encourage good citizenship, 
while the latter cultivates a careless and indifferent attitude 
with respect to public affairs. One of the most unfortunate 
features of our federal finances is that federal taxation is en- 
tirely indirect. Were nearly four hundred millions of dol- 
lars collected yearly by the federal government by means of 
direct taxes, it would change public sentiment in regard to 
many measures before Congress, and it is safe to say that 
extravagance and wastefulness, now tolerated, would imme- 
diately become impossible. Bills to pauperize the nation by 
reckless and indiscriminate grants of pensions would cease 
to trouble us. It may, indeed, on the other hand, be ques- 
tioned whether people would tolerate a sufficiently high 
rate of taxation to meet the necessary, and legitimate ex- 
penses of government. John Stuart Mill expresses the fear 
that a substitution of direct taxation for all indirect taxes 
would be dangerous, because it would be felt severely and 
would render the temptation to repudiation of public debts 
and obligations too strong to be resisted.-^ It is said that 
high direct taxes have been one cause of the frequent rev- 
olutions in Mexico.^ 



A JUDICIOUS COMBINAnON OF DIRECT AJSTD INDIRECT TAXES 
DESIRABLE. 

High direct taxes have been a cause of repudiation in 
Southern states, while unwillingness to bear any direct taxes 

1 " Political Economy," Book V., Chapter VI. 

2 Roscher, " Finanzwissenschaft," Book III., Chapter III. 



DIRECT AND INDIRECT TAXATION COMPARED. 89 

at all ruined the works of internal improvement in Pennsyl- 
vania, and endangered the credit of Maryland, as has al- 
ready been mentioned. It is desirable on these accounts to 
combine direct and indirect taxes wherever practicable, and 
to make direct taxes contribute a large share to the expenses 
of government in proportion as people become intelligent 
and patriotic. While our state revenues are derived chiefly 
from taxes of which the greater portion are direct, the num- 
ber of tax-payers as distinguished from the tax-bearers is far 
too small, for our direct taxes are in many cases shifted. 
Taxes on houses are usually borne in part by tenants, but 
these tenants do not themselves pay the tax in the first in- 
stance ; they do not at once and immediately feel the effects 
of a change in the tax rate, and consequently they are too 
much inclined to assume an attitude of indifference in re- 
spect to public affairs. One of the best features of the Eng- 
lish income tax is that it is a variable tax felt by the payers, 
rising and falling with the changes in the needs of govern- 
ment. 

Federal governments like the United States and Germany 
find it convenient, on account of the structure of government, 
to divide sources of revenues with the states, and to reserve 
indirect taxes for themselves. While there is much that is 
to be commended in this, for reasons already mentioned, 
and for others which cannot be here elaborated, — since this 
book deals primarily with states and cities, and only inci- 
dentally with the federal government, — it would be well not 
to carry this separation so far as we have done in the United 
States. It would be desirable to develop a complete sys- 
tem of federal taxation by including some variable taxes 
which would be more severely felt, possibly by a tax, among 
others, on gross receipts of railroads engaged in interstate 
commerce. 



90 INTR OD UC TION. 



COMPARISON OF THE COST OF RAISING REVENUES BY DIRECT 
AND mDIRECT TAXATION. 

There has, in recent years, been a very general improve- 
ment in administrative methods used for raising revenue by 
indirect taxation, but the cost of collecting the proceeds of 
direct taxes is still considerably smaller, and they thus con- 
form in this respect also more nearly to the ideal of taxa- 
tion. The cost of collecting direct taxes in France before 
the Revolution was 6 per cent., and of indirect taxes 14 
per cent. In 1881 the cost of collecting the taxes on 
commodities was estimated at 5.13 per cent., while the cost 
of raising the revenues from direct taxes in 1876 was 3.5 
per cent. It cost 14 per cent, to collect the indirect taxes 
in the Belgian communes before i860. In England the 
cost of raising revenues from the excise in 1858 was 4.82 
per cent., from customs -li-^ per cent., and from direct taxes 
4.09 per cent., but in 1859, on account of the higher rate of 
income tax, the cost of collecting direct taxes was only 2.87 
per cent. In Prussia, in 186 1 the direct taxes cost 4 per 
cent., and the indirect taxes, with the exception of the salt 
monopoly, 12 per cent. The cost of raising revenues from 
direct taxes rose in Prussia in 1883-84 to 7 per cent., while 
the cost of raising the revenues from indirect taxes had fallen 
to 9! per cent.^ 

For the first twenty-five years of the existence of our 
federal government the average cost of collecting customs 
duties was a little less than four per cent., while it is now 
about three per cent. ; the cost of collecting the internal 
revenue taxes is between three and four per cent. A law 

1 These statistics are taken from Roscher, " Finanzwissenschaftj" 
Book III., Chapter III., § 91. 



DIRECT AND INDIRECT TAXATION COMPARED. 91 

was passed in 1798 by Congress for a direct tax on houses, 
which was soon aboHshed. The cost of collecting the revenue 
from this tax appears to have been about nine per cent., but 
this is no test, as the tax was of short duration, and never 
had a fair trial.^ 

The cost of collecting all federal revenues during the 
period immediately succeeding the Civil War was between 
three and four per cent., while the income tax cost only two 
per cent. It was the cheapest tax collected except the tax 
on national banks, which costs nothing to collect.^ 

It is common to give one and two per cent, of taxes in 
American states for cost of collection, to which it would be 
necessary to add cost of assessment. 

The state of Maryland pays one per cent, to the city col- 
lector of Baltimore as remuneration for collecting state taxes 
in the city. 

The expenses of the Baltimore city collector's office, 
salaries included, amounted to ^47,490.02 during the year 
1886, and during that year he collected ^4,254,465.26, 
which would make the expenses of collection over one per 
cent., say roughly one and one-tenth per cent. Other muni- 
cipal expenses must be added, but, on the other hand, it costs 
little or nothing to collect certain taxes. The street-railroads 
pay nine per cent, of their gross receipts to the city treasurer, 
and officers of other corporations send their taxes to the 
state and city treasurers respectively. But, again, state and 
city allow discounts varying from seven per cent, to one-half 
of one per cent, for early payment of taxes, and perhaps 
this ought to be added to cost of collection, although it is 

1 "Taxation in the United States, 1789-18 16," by Henry C Adams, 
pages 35-70. 

'-2 See Sherman on Income Tax, in the United States Senate, Jan, 25, 
1 87 1, in his " Speeches and Reports." New York, 1879. 



92 INTR ODUC TION. 

not money taken from the pockets of the tax-payers at all. 
This item of expense is a vicious and needless feature of the 
administrative machinery. 

The total receipts of New York City from taxes amounted 
10^31,568,096.98 in the year 1886, and the "Department 
of Taxes and Assessments" and the " Finance Department," 
together, are charged with $361,961.21 in the "appropria- 
tion account," which would be a trifle less than one and one- 
sixth per cent. It must be remembered, however, that these 
departments have some other duties than those concerned 
with the collection of taxes. ^ 

It is an impossibihty to tell what it costs American states 
and cities to collect their direct taxes, for returns are too 
imperfect. Nothing more than guess-work is possible. 
From such examinations as I have been able to make, " I 
guess " it is not less than three per cent., but I beheve it 
quite practicable for all larger cities by better systems of 
taxation and improved administrative machinery to reduce 
the cost to less than two per cent., and this is far below 

1 In a letter from Hon. A. J. Perry, county clerk of Knox Count}', 
111., the following facts regarding assessment and collection are given: 
The township collectors in Knox County receive two per cent, of 
amounts collected by them. In Galesburg, the county-seat, the collec- 
tor receives a salary amounting to about one and one-fourth per cent. 
The salary of the county treasurer is more than covered by his fees, 
which are one per cent, of sums received as county and state taxes. 
The assessors in the townships receive S2.50 per day. The average 
cost for assessing is about $12.^.00 per township of $450,000 valuation. 

The following statement of the cost of collection in Illinois is found 
in Dr. Patten's essay on " Finances of States and Cities of the United 
States " : Tax collectors in counties with less than 20,000 inhabitants 
receive three per cent, of the taxes which they collect; in counties with 
from 20,000 to 70,000 inhabitants, two per cent., and in counties with 
over 70,000 inhabitants, one and one-half per cent, as compensation for 
their labor 



DIRECT AND INDIRECT TAXATION COMPARED. 93 

what it would cost them to collect revenues by any conceiv- 
able system of indirect taxation within their reach. It must 
further be remembered that the indirect cost of indirect 
taxes is more serious by far than the direct cost. This has 
been amplified in what has been said about obstructions to 
trade by indirect taxes, their tendency to foster monopoly, 
and their expensiveness as seen in increased cost of produc- 
tion, each producer adding to his advance until the burden 
rests on the tax-bearer, the consumer.^ 

When it is desired to make people of small means con- 
tribute to the support of government, it can only be done 
by indirect taxation, because they are not prudent enough to 
save money for the tax-collector, and it costs far more to col- 
lect direct taxes from very small properties or incomes than 
it does to collect indirect taxes,' and is a greater hardship. 
Direct taxes have been paid monthly, but quarterly pay- 
ments are the smallest which work well, whereas indirect 
taxes can be paid day by day in purchases. 

1 Matches which formerly sold in Baltimore for fifteen cents for 
six boxes now sell for six cents for six boxes. Of the difference of nine 
cents, six was the federal tax. A reduction of six cents in taxation 
effected a reduction of nine cents in price. The cost of getting the six 
cents from the pockets of the tax-payers to the treasury was fifty per 
cent, plus the cost of the administrative machinery, which would make 
the total cost of collection about fifty-three per cent. 

2 More will be said about this in a subsequent part of this work. 



CHAPTER VII. 

THE LITERATURE OF TAXATION. 

PAUCITY OF THE LITER-\TURE OF TAXATION. 

THE literature of taxation in the English language is 
meagre, and an American Hterature on this subject 
can scarcely be said to exist. American states and cities 
spend over three hundred millions of dollars annually, and 
the annual expenditures have long been increasing with 
rapidity, and may be expected to increase in the future. 
The amount of these revenues, the manner in which they 
are raised, and the purposes for which they are expended 
are of vital concern to every American citizen ; yet, strange 
as it may seem, the present is the first work on taxation in 
American states and cities. 

REPORTS OF TAX COiOnSSIONS. 

Numerous reports of tax commissions have appeared, but 
these have been printed as public documents and are not 
readily accessible — a fact which, as to some of them, is per- 
haps no misfortune. One of the most noteworthy of the re- 
ports of special state tax commissions appointed to investi- 
gate the subject, is the " Report on Local Taxation," made 
by Messrs. David A. Wells, Edwin Dodge, and George W. 
Cuyler, commissioners appointed by the governor of New 
York. The report was made in 1871, and was published 
in the same year.^ This Report has done more than any 

1 New York, Harper & Brothers 



THE LITERATURE OF TAXATION. 95 

other pu"blicatioR to draw attention to the subject of taxa- 
tion in American commonwealths. 

The " Report of the Massachusetts Commissioners relating 
to Taxation," made in 1875, and printed as a pubHc docu- 
ment, is a carefully prepared volume which deserves the 
attention of the special student. It advocates the retention 
of the main features of the existing system of taxation in 
our states. 

The " Report of the Revenue Commission of Illinois," 
made in 1886, suggests certain reforms in the taxation of 
railroads, and elaborates a new and simple scheme for esti- 
mating their value. It also advocates the separation of the 
sources of state revenues from those of local revenues, and 
of this more will be said hereafter. 

The "Report of the Tax Commission of Baltimore," made 
in 1886, presents a carefully elaborated administrative system 
for the assessment of municipal taxes, which will be reprinted 
in this volume in its appropriate place. 

The "Report of the Maryland Tax Commission," made in 
1888, gives a description of the existing system of taxation 
in Maryland, and the appendix contains an historical sketch 
of tax legislation in the state, from the colonial period to the 
present time. It is shown in the body of the Report that 
railroads in Maryland pay less than half as much as individ- 
uals, in proportion to their property. 

TREATISES ON POLITICAL ECONOMY AND FINANCE. 

Treatises on political economy usually have a few chap- 
ters devoted to taxation ; but these do not as a rule go be- 
yond very general considerations ; and when they do enter 
upon historical developments, or descriptions of actual 
financial systems, it is almost invariably only national finance 



96 INTR OD UC TION. 

which is discussed. Walker's " Pohtical Economy " ^ presents, 
some general views which deserve attention. Fawcett's 
"Political Economy"- contains a chapter on local taxation 
in England, while John Stuart Mill in his classical treatise^ dis- 
cusses general principles with his usual profundity of thought. 

The great German works are far more inclusive. Over 
thirty years ago Professor Roscher of the University of 
Leipsic began a work entitled "A System of Political Econ- 
omy," to be completed in four volumes, on which he is still 
working with that diligent research which so characterizes 
the German student. The first part of Volume IV. treats 
of finance, and has recently appeared.^ It makes a book 
of nearly seven hundred pages, and presents a sketch chiefly 
historical and descriptive, but also critical and suggestive, of 
the finances of modern nations, states, and cities. 

The greatest financial work which has ever appeared is 
that of Professor Adolf Wagner of Berlin, and this is also a 
part of a larger economic treatise. Two volumes on finance 
have already appeared, and one or more are to follow. Wag- 
ner exhibits in the treatise the results of careful research, of 
legal training, of some practical political activity, and of 
wonderful profundity and originality of thought. The book 
does not appear to be in every respect well arranged, and it 
is not easy reading for one who has not a complete mastery 
of the German language. Wagner has also been blamed for 
long digressions on matters like railroads and forestry, but it 
seems to me without cause. Were political economy and 
finance as highly developed as some of the natural sciences, 
familiarity with such topics might be presupposed, or the 

1 New, unabridged edition, Henry Holt & Co., New York, 1887. 

2 Sixth edition, London, Macmillan & Co., 1883. 

3 Unabridged edition. 

* Second edition, Stuttgart, 1886. 



THE LITERATURE OF TAXATION. 97 

reader referred to other works ; but as matters are, it is 
often necessary as one proceeds to explain things, a knowl- 
edge of which is required for a comprehension of other 
matters, although one is well aware that they could with 
more propriety be discussed elsewhere. Wagner's work is 
one which no special student of finance in our day can 
afford to neglect,^ whatever may be his own views. 

The only complete economic treatise presenting the 
science as it is to-day is one which has been prepared by 
the co-operation of some twenty-five of the highest German 
authorities, under the editorship of Professor Gustav Schon- 
berg, of the University of Tiibingen.^ The third volume 
treats of finance and administration, and is, probably, the 
most useful handbook of all the German treatises ; at any 
rate, it is the treatise which should be procured by the student 
whose means will not enable him to purchase more than 
one work. Perhaps the most important of the monographs 
embraced in this volume are those by Helferich on the 
" General Principles of Taxation," by von Scheel on the 
^'Revenues from Gainful Pursuits," by Wagner on "Direct 
Taxes," and by Baron von Reitzenstein on '•' Local Taxation." 

One of the earliest complete and systematic treatises on 
finance was written by Professor Lorenz von Stein of the 
University of Vienna, the earliest, I think, of the standard 
treatises.^ Stein is one of the highest authorities on admin- 
istration, and his work on that subject was the first attempt 
to treat it as an independent science. His " Text-Book of 
Finance " treats laws concerning finance as a part of admin- 

1 "Lehrbuch der Politischen Oekonomie." Volumes V. and VI. C. 
F. Winter'sche Verlagshandlung, Leipsic and Heidelberg. 

2 Second edition, Tubingen, 1 886. 

^ The second edition appeared in 1871, the first probably a year or 
two earlier; the fourth, in two volumes, appeared in 1878. One part of 



98 INTRODUCTION. 

istrative law, and is noteworthy on that account. Stein also 
gives a comparative view of the literature and legislation of 
England, France, Germany, Austria, and Italy.^ 

Probably the American student will find the lucid work of 
Paul Leroy-Beaulieu, "Traits de la Science des Finances,"^ 
easier reading, and possibly more interesting. The style is 
better than that of the German works, as might be expected ; 
and Leroy-Beaulieu 's ideas, if less profound, are more 
easily grasped. Leroy-Beaulieu is less original than Wagner, 
and a less careful historian than Roscher, but the book is 
systematically and well arranged, and abounds in useful posi- 
tive information about the financial systems of all modern 
nations. It is an indispensable work for the careful student 
of finance. 

SPECIAL TREATISES. 

America has at last a work on one of the aspects of 
modern finance which can compare favorably with the trea- 
tises mentioned above. I refer to the thoughtful and well- 
written work by Professor Henry C. Adams of the Univer- 
sity of Michigan, entitled " Public Debts." ^ Part III. deals 
with state and local public debts, and it is needless to say 
that a treatment of debts is an essential part of any com- 

Rau's great work on political economy treated of finance and ap- 
peared many years earlier ; but although Rau occupies an honorable 
position in the history of pohtical economy, he has been superseded 
by more modern authors. 

1 Stein is severely criticized on account of inaccuracies, and also on 
account of a strange and confusing use of technical terms, by Neumann 
in his monograph " Die Steuer nach der Leistungs fahigkeit." Jena, 
I 880-1 88 I. 

'^ In two volumes, 3d edition, Paris, 1883. 

3 New York, 1887. 



THE LITERATURE OF TAXATION. 99 

plete work on finance. The book is historical, descriptive, 
critical, and suggestive, and is in every respect admirable. 

Cooley's treatise on "Taxation" gives a clear statement of 
American law, federal, state, and local, and is the standard 
legal work on the subject. 

Mr. T. K. Worthington's " Historical Sketch of the Finan- 
ces of Pennsylvania" is the first careful treatment of the 
finances of an American commonwealth, and is of value as 
dealing with the financial history of that commonwealth, 
which has perhaps embodied more peculiar features in its 
system than any other state. Mr. Worthington discusses at 
considerable length the public works of Pennsylvania, and 
the fiasco which she made with them.^ 

"Statistique Internationale des Villes," edited by Joseph 
Korosi, Director of the Bureau of Statistics of Buda-Pesth,^ 
presents in the " deuxieme section " an analytical and sta- 
tistical account of the finances of Buda-Pesth, Vienna, 
Trieste, Leipsic, Stuttgart, Munich, Frankfort- on-the-Main, 
Rome, Turin, Venice, Palermo, Liege, Stockholm, Chris- 
tiania, Copenhagen, Antwerp, Bucharest, Breslau, Genoa, 
Florence, Boston, St. Louis, San Francisco, London, Berlin, 
and Paris. 

" Traite des Impots," by E. de Parieu, is a work in four 
volumes^ on taxes, considered historically and critically. 
French literature and foreign literature are both discussed, 
and the laws and customs of France and other leading 
nations are presented. National and local taxation are 
treated at length ; and although the work was written so long 
since that many of the more recent facts and theories fail 

1 Published by the American Economic Association, Baltimore, May, 
1887. 

2 Paris, Guillaumin & Co., 1876-77. 

3 Second edition, Paris, 1886. 



100 INTR OD UC TION. 

to receive attention, Walker speaks of it in his " Political 
Economy " as " the ablest French work on the subject." 

" Local Government and Taxation in the United King- 
dom " is the title of a series of essays published under the 
sanction of the Cobden Club, and edited by J. W. Probyn.^ 
" Reports and Speeches on Local Taxation," by the able 
English financier and politician, George J. Goschen, is per- 
haps still more important.^ 

" The National Budget, National Debt, Taxes and Rates," ^ 
by A. J. Wilson, is a volume in the '"' Enghsh Citizen " Series, 
giving a condensed but not well-arranged account of English 
taxation, in which many points are not sufficiently elucidated 
for the foreign reader, and I think not sufficiently for the 
English reader. 

" Local Administration," by Messrs. Rathbone, Pell, and 
•Montague, in the " Imperial Parliament " Series, is a ver\' 
brief description of local government and taxation as it 
exists in England, and as, in the opinion of the ^^Titers, it 
should be. 

" A History of Taxation and Taxes in England from the 
Earliest Times to the Present Day,"^ by Stephen Dowell, As- 
sistant Solicitor of Inland Revenue, is a work in four vol- 
umes, in which will be found the most detailed and complete 
account of English taxation extant, and it is of special value 
to the American as well as to the English student. The plan 
is a good one. The first two volumes treat of the history of 
taxation in general, and the third and fourth volumes pre- 
sent^the history of the particular taxes. Volume I. gives 
the history of taxation from the earliest times to the Stuart 
period and Civil War, inclusive, and Volume 11. begins 
with the time of the Com.monwealth, when the modem sys- 

1 London, 1882. 2 London, 1872. ^ London, 1884. 



THE LITERATURE OF TAXATION. 101 

tern of taxation is said by the author to have begun. The 
third volume presents the history of direct taxes and stamp 
duties ; and the fourth, of the indirect taxes on articles of 

consumption. 

This is not intended to be a complete bibUography, but 
simply a list of a few of the most noteworthy books for the 
student of taxation, — those, let us say, which ought to be 
found in any good working school or college library. The 
one who desires to become a specialist will find in the works 
mentioned a sufficient number of references to other works. 

OTHER SOURCES OF INFORMATION. 

The other sources of information are official documents 
of states and cities. The principal one in the different 
states and cities bears different names. Sometimes the Au- 
ditor's Report is the chief financial document of a state or 
city, but frequently it is the Comptroller's Report. The 
Treasurer's Report, and Governors' and Mayors' Messages 
are often valuable. The "Instructions" which proceed 
from central offices, like that of the Comptroller- General, 
are valuable. The tax laws are the foundation of the va- 
rious systems of taxation in American states and cities, and 
these are sometimes published in pamphlet form ; but it is 
frequently necessary to consult the " Revised Statutes " of 
the states, and these ought to be in every college and semi- 
nary library. Schools and colleges will usually be able to 
obtain public documents of the states in which they are sit- 
uated, on application to the proper authority at the capital, 
or through the representatives of their districts in the state 
legislature. Those of other states can sometimes be pro- 
cured by application to the Secretary of State, State Treas- 
urer, or Auditor of State, but these are less important for 
any but the most advanced students. 



PART II. 

TAXATION AS IT IS. 



I 



I 



PART II. 

TAXATION AS IT IS, 
CHAPTER I. 

COLONIAL TAXATION. 

INTRODUCTORY REMARK. 

LAWS and institutions are a growth ; and consequently 
they cannot be understood without an historical 
examination of their past. Past, ].resent, and future are 
a continuity ; and he only knows the present who com- 
prehends those events in the past which led up to the 
present, while he who would work for the future must 
have some clear conception of forces which even now are 
giving it shape. It seems desirable, therefore, to precede 
a description of our actually existing systems of taxation with 
some account of their origin and subsequent growth ; and, 
as many of the early American laws and customs are still 
in force, or are still felt in existing institutions, it does 
not appear inappropriate to place a brief historical sketch 
of taxation in America in Part II. of the present work, 
although it bears the title, "Taxation as It Is." It must 
be remembered that our past is, after all, quite recent ; 
that we hardly have a past at all, in matters like taxation, 



106 TAXATION AS IT IS. 

in the sense in which the great nations of Europe have a 
past. 

Attention will be called first to colonial taxation ; then 
to taxation as it existed in 1796, when Mr. Wolcott, Sec- 
retary of the Treasury, made a report on taxation in Ameri- 
can states ; thirdly, to a transition period between 1796 and 
the present ; and finally, to a description of the main feat- 
ures of our present laws, and their workings in actual prac- 
tice. 

THE COLONIES INSIST UPON THE RIGHT TO VOTE THE TAXES.^ 

In examining the records of the American colonies one 
finds that while there was murmuring at times on account 
of heavy burdens, and while complaints of unfair apportion- 
ment of taxes among to^vns or occupations were not infre- 
quent, more concern was shown regarding that principle, the 
defence of which ended in the struggle for independence. 
The spirit which later resisted a petty tax because laid with- 
out the consent of the colonists is plainly visible in the 
enactments of the early assemblies. The provision that no 
tax should be levied or collected except with the consent of 
the people to be taxed, or of their representatives, was com- 
mon to all ; and while it was violated and wholly disregarded 
at times by royal governors, it was generally conceded to as 
a matter of prudence and policy.^ 

1 In compiling this chapter, the following books, with others, have 
been consulted : " Records of Massachusetts Bay Colony," Arnold's 
" History of Rhode Island," " Records of New York," " Laws of Penn- 
sylvania," "Laws of Virginia" (Henning), Scharfs " Histoiy of Mary- 
land," Egleston's " Land System of the New England Colonies." 

2 " The early history of North Carolina is mainly one of resistance 
by the people to the governor's illegal taxation." — Alexander yohn- 
ston's ''History of the United States,'' page 50. 



COLONIAL TAXATION. 107 

In the earlier days of the colonies there was no great 
need for taxes. The mother country asked no assistance 
from them ; quit-rents satisfied the demands of the proprie- 
tary or the company, who in turn promised at least partial 
protection ; fierce wars had not yet transferred the burden 
of defence to the shoulders of the people ; the public wants 
of 'the colonists themselves were simple and easily supplied; 
there were few officials, and these were either wholly without 
compensation, or received but a few slight fees ; and the 
chief and almost sole objects of their contributions were 
churches, schools, and highways. 

RHODE ISLAND. 

Mr. Gardner has shown that forfeitures, fines, fees, and 
payments for land defrayed nearly all of the expenses of 
Rhode Island during the colonial period. The abundant 
land of American colonies, then later of American states and 
federal government, has done more to obviate the necessity 
of taxation, or to render taxation lower than it would other- 
wise be, than is generally understood. Land has been used 
in this country as an endowment for office as well as in Ger- 
many and England. Robert Lenthall, school teacher and 
minister, received 104 acres of land from Newport in 1640, 
and 100 acres was appropriated for a school "for the encour- 
agement of the poorer sort."^ This is chiefly interesting as 
an early example of frequent practice in our subsequent his- 
tory. New states have reserved portions of public lands — 
every sixteenth section — for school purposes. The federal 
government in 1862 gave land to each state equal in amount 
to 30,000 acres for each representative and senator in Con- 

1 Quoted by Mr. Gardner from Arnold's " History of Rhode Island," 
Volume I., page 145. 



108 TAXATION AS IT IS. 

gress ; and it has given 200,000,000 acres for the encour- 
agement of railroad building. Some towns in Switzerland 
and Baden, it is interesting to note in this connection, have 
retained public lands, and a few derive therefrom a revenue 
sufficient to defray all local expenses and to enable them 
to divide a small sum of money among the citizens each 
year. 

As is still often the case in Germany, and occasionally in 
the United States, the acceptance of certain offices was com- 
pulsory, and this was a means whereby governments could be 
carried on without taxation. It is not, then, so surprising as 
it would be now to read a report of the general treasurer of 
Rhode Island in 1649, that he had received nothing and 
had nothing in his hands ; nor could this extract from a let- 
ter of Gregory Dexter, town clerk of Providence, to Sir 
Henry Vane, be regarded as so astonishing as it would be 
to-day : " Sir, we have not known what an excise means. 
AVe have almost forgotten what tythes are ; yea, or taxes, 
either to church or commonwealth." 

From 1647 to 1689 all the taxes levied in Rhode Island 
amounted to ;£36oo, or about £600 sterling. It is curious 
to notice that in 1699 one of the complaints made against 
the colony by Bellmont was this : " They raise and le\^ 
taxes and assessments upon the people, there being no 
express authority in the charter for so doing." There is, in 
fact, reason to believe that one of the things against which 
our forefathers in England and the American colonies con- 
tended was not against oppressive taxation, but against the 
payment of any taxes at all. It required a long struggle to 
bring about a complete and ready acknowledgment of th<^ 
right of taxation. 



COLONIAL TAXATION. 109 

VOLUNTARY CONTRIBUTIONS EARLY REPLACED BY TAXES. 

As has already been noticed, the contributions of the 
colonists were at first more or less voluntary in their nature. 
The church and the commonwealth were closely allied, and 
as all who received the benefit of the former felt it their 
duty to contribute to its support in proportion to their 
means, so they were also expected to give in like manner to 
the maintenance of the latter. The case of Rhode Island 
has been cited, and the records of Massachusetts Bay Colony 
also furnish very clear proof of this fact. The General Court, 
obser\-ing that many who were not freemen nor members of 
the church, took advantage thereof to '• withdraw their helpe 
in such contributions as are in use," in 1638 declared that 
every inhabitant in any town was liable to contribute to all 
charges, both in the church and commonwealth, and that 
every such inhabitant who should not voluntarily contribute 
should be compelled to do so. This example illustrates the 
change that must have occurred in all the colonies at a very 
early period. Individual selfishness and consequent dis- 
honesty on the part of some made compulsory contribution 
necessary, and thus direct taxes became a substitute for vol- 
untary contributions. 

TAXES ON PROPERTY' AND POLLS. 

Direct taxes were laid either in proportion to property 
held, real and personal, or according to income, or as a 
.uniform charge upon the poll, or head. 

Taxes on property were to be found in all the colonies at 
one time or another, and were employed by the New Eng- 
land colonies either with or without other taxes, contin- 
uously. The collective mass of property was frequently the 
basis for the estimate of each one's share, though certain 



110 TAXATION AS IT IS. 

objects were often exempt, and sometimes specific objects 
were named as alone subject to taxation. The people of 
New Netherlands, complaining of their burdens, were 
pointed by the secretary of the Council to New England, 
where everything was taxed, and were reminded that they 
themselves suffered only from an excise tax on beer and 
wine and from duties on a few imports and exports.^ A few 
years later, 1653, however, these same people were com- 
plaining of the following taxes : chimney and head money ; 
a tithe of all grain, flax, hemp, and tobacco ; a tithe of all 
butter and cheese ; and excessive export duties. But in- 
equalities arose from the taxation of visible property alone, 
and to equalize the burdens, the estimated incomes of cer- 
tain classes, as merchants, agents, etc., were taxed. These 
two taxes were not infrequently employed together, the one 
supplementing the other. While the former were laid ac- 
cording to a uniform rule of valuation, it was left to the 
assessor to estimate incomes. 

The early history of Springfield, Mass., illustrates in an in- 
teresting manner many of the features of colonial finance. 
Taxes were laid in proportion to the number of acres 
which each one held, until 1655, and those without land 
or cattle escaped altogether. After 1655, land, houses, and 
stock were valued, and every person not dependent was 
assessed five shillings for the support of the minister. It 
was ordered in 1661 that "men shall be assessed for their 
merchandizing and trading sutable to trade they drive in 

1 The secretary very skilfully explains the workings of these in- 
direct taxes. He shows that it is not the vintners who pay the excise 
tax on beer and wine, but those who daily resort to their houses, and 
the traveller from New England, Virginia, and elsewhere. The high 
prices of imported goods he ascribes to the greed of traders, and not 
to the duties. 



COLONIAL TAXATION. Ill 

the towne, each also is to be judged by the selectmen." It 
was further ordered in 1661 that all men of sixteen and 
over, save sick, and infirm, should be valued at ;^i2, ^16, or 
^20, at the discretion of the selectmen. Wealth appears 
to have increased, and in 1672 there were one hundred and 
seventy voters who were valued at over ^20. 

The selectmen were not "accounted discharged of their 
trust " until they had paid all the debts of the town, but 
they could levy a special tax therefor, if necessary. The 
acceptance of the office of selectman was compulsory, and 
in 1670 it was provided that the selectmen should be fur- 
nished a dinner at public expense when they met for town 
business. This was the first time that they were remunera- 
ted for their services. 

Among the fines which yielded revenue may be noticed 
those for the violation of the sumptuary laws. In 1667, 
Mary Stebbins was fined ten shillings for wearing silks con- 
trary to law, and sixty-eight persons were accused of indul- 
gence in forbidden luxuries. A heavy fine of a different 
nature was imposed on Nathaniel Ely, inn-keeper, in 1674, 
because his beer was not made according to law.^ 

The poll tax was, like the property tax, employed by all 
the colonies at one period or another. It was the only 
direct tax levied in Virginia for years. Although it was 
in 1645 termed inconvenient and insupportable for the 
poorer classes, and all taxes placed on visible estates, it 
was revived in 1649, ^^<^ was continued until 1663, '^^'l^en 
a land tax was decided to be most equitable. Very few 

1 The valuable essay by Dr. E. W. Bemis, entitled " Old Time An- 
swers to Present Problems, as Illustrated by the Early Legislation of 
Springfield," is authority for statements in this paragraph. The essay 
was based on a study of original archives, and was published in The 
New Englaiider for February, 1887. 



112 TAXATION AS IT IS 

were exempt. Ma^land had, before the Revolution, prac- 
tically no other direct tax. All free men, free women, and 
children over twelve years of age were included in the 
levy. This tax became, to the people of this colony, most 
unpopular, and that for principal reasons. It was felt they 
were not fair because not in proportion to ability as meas- 
ured by property, and it was difficult to make the payments, 
because, while hemp, flax, or other produce, or paper money 
might serve as legal tender for other debts, the poll tax 
must be paid in tobacco, a given number of pounds per 
poll, the value of which was increased at times, by a 
designed diminution of the supply. The tax became ex- 
tremely burdensome, and was in 1777 declared "grievous 
and opprecsive." In other colonies this tax seems to have 
always accompanied other taxes. 

QUIT-RENTS. 

Quit-rents were annual charges on lands in the colonies 
under proprietary government, and were to be found, to a 
sHght extent, in others. These, in some cases, were suffi- 
cient to cover both dues to the proprietors and all public 
expenses. Lands in colonies non-proprietary were appor- 
tioned among the members of the colonizing companies, 
according to the amount of stock held, or among non- 
stockholders for certain services rendered. In later set- 
tlements, the amount of one's ratable property was made 
the basis of apportionment. Lands were seldom sold.-^ 

FEES. 

Fees were a common source of revenue, and were gener- 
ally apphed to the support of public officials. The minister 

1 "The Land System of the New England Colonies," Melville Egle 
ston, page 39. 



COLONIAL TAXATION. 113 

received fees for marrying, for christening, churching, and 
burying; the clerk for issuing court-papers and making 
records ; the sheriff for making arrests and inflicting pun- 
ishment ; and so with other officers. 

Licenses and fines also yielded considerable revenue. 
Liquor and marriage licenses, and those imposed on 
pedlers and lawyers were most common.-^ 

OTHER TAXES. 

Many singular objects of taxation appear in the lists of 
some of the colonies. In Virginia, there was a window 
tax; in Maryland, a tax on bachelors above twenty-five 
years of age ; ^ in New York, a tax on wigs ; not to men- 
tion others equally odd. 

LOTTERIES. 

Lotteries were not an uncommon device for raising 
money, especially in the later days of the colonies when 
burdens became heavier. Mention of them is made in 
the Rhode Island records as being employed for such 
public purposes as building and repairing forts, court- 
houses, market-houses, and even churches. A lottery was 
established in Maryland in 1768 for the purpose of rais- 
ing money to support an agent to be sent to England to 
present to the king the grievances of the people. Penn- 
sylvania raised money by this means for certain public 
improvements ; Virginia, for defence in the French and 
Indian War, and also for building schools, academies, 

1 A part of the tax on pedlers in Virginia, together with the reve- 
nue from import duties on liquors, was paid to the visiting committee 
of William and Mary's College for the support of professors. 

2 " Levied according to their property, one hundred per cent, to be 
added in case of papists." — Scharf. 



114 TAXA TION AS IT IS. 

churches, etc. ; Connecticut, for erecting buildings for 
Yale College ; and other colonies were doubtless no less 
backward in their use.^ " It was with the money col- 
lected from the sale of lottery tickets," says McMaster, 
"that Massachusetts encouraged cotton spinning, and paid 
the salaries of many of her officers ; that the city hall 
was enlarged at New York; that the court-house was 
built at Elizabeth ; that the library was increased at Har- 
vard ; and that many of the most pretentious buildings 
were put up at the federal city."^ The Continental Con- 
gress in 1777 established lotteries to raise funds for carry- 
ing on the war, and sent agents into all the states to sell 
tickets. 

DUTIES. 

Excise duties were laid in most, if not all, of the colonies 
on the manufacture of liquor. Duties on exports and im- 
ports were also laid, but without regularity, or regard for the 
interests of the colonies as a whole. One colony, for 
instance, taxed rum coming from a neighboring colony, but 
admitted the foreign article free of duty. Export duties were 
laid on but few articles. The object seems to have been 
merely revenue,^ bounties being sometimes granted for the 
encouragement of industries. Some of the colonies enjoyed 

1 Money was raised for Columbia College, in the naiddle of the last 
century, by an authorized lottery. Vincennes University, Indiana, re- 
ceived profits from a lottery in this century. McMaster gives a list of 
no less than twenty lotteries in operation in the various states during 
the years 1788-91. 

2 McMaster, " History of the American People," Volume I., page 588. 

3 Pennsylvania, at the close of the Revolution, for the purpose of 
protection and encouragement of home industries, laid an import duty 
on no less than a hundred articles, including products, manufactures, 
and raw material. 



COLONIAL TAXATION. 115 

considerable revenues from these duties. Duties on tonnage 
of vessels, usually payable in powder and shot, were col- 
lected at the ports and apphed to the maintenance of fortifi- 
cations. Other revenues were applied to payment of the 
general expenses of the colony. 

Taxes were as a rule collected "in kind," the i!\ssembly 
or the General Court naming the price at which the various 
commodities should be received. 

The systems of taxation in colonial days were still contin- 
ued without change by some of the colonies when they 
became states, and will be noticed in greater detail in the 
following chapter, which treats of taxation in the various 
states at the close of the century. 



CHAPTER II.i 

TAXATION IN 1796. 

THE provisions of the laws of the various states in 
1796, touching taxation, present a great diversity, 
both as to the objects and principles of taxation and as to 
the methods of apportionment and collection of taxes. So 
different were the systems in operation in the various states 
that the Secretary of the Treasury, Mr. OUver Wolcott, who 
had been directed by Congress to prepare a plan for laying 
and collecting federal taxes, declared in his report that they 
were " utterly discordant and irreconcilable in their original 
principles," and could not be adopted as a means for the 
just apportionment and prompt collection of a general tax. 
In seven states, for example, there was a uniform capitation 
tax, which was unknown in the others. In some, all prop- 
erty, with a few exceptions, was taxed ; in others, specific 
objects were named. Land was taxed in one state accord- 
ing to quantity, in another according to quality, and in a 
third not at all. Responsibility for the assessment and col- 
lection of taxes in some cases attached to the state itself; 
in others, to the counties or townships. 

Such diversity where uniformity would be prescribed by 
the fundamental principles of taxation may be regarded as 

1 The authority for the greater part of the matter contained in this 
chapter is the report made by Mr. Oliver Wolcott, Secretary of the 
United States Treasury, concerning taxation in the various states of 
the Union. See "American State Papers," Finance, Volume I. 



TAXATION IN ijgd. 117 

evidence of the faultiness of most, if not all, of these sys- 
tems, and yet httle dissatisfaction seems to have been mani- 
fested in any of the states. Explanation of the apparent 
efficiency of all these methods is doubtless to be found in 
the fact that the taxes were not sufficiently heavy to really 
test them and discover their weak points. How burden- 
some the county and township taxes were at this time has 
not been ascertained, but those imposed by the states were 
comparatively light. The average annual expenditure of 
each of the fifteen states enumerated for the support of 
civil government was less than ^70,000 ; the total, about 
^1,000,000.^ To meet this expenditure many had revenues 
from other sources than direct taxes, and a few had a suffi- 
cient amount to free them from the necessity of levying any 
considerable direct taxes, while New York, Pennsylvania, 
and Maryland for years levied no direct tax whatever for 
state purposes. It is not, then, at all strange that machin- 
ery which would now be regarded as somewhat slow, clumsy, 
and inefficient, should at that time have performed satisfac- 
torily the small amount of work demanded of it. 

It shall be the object of this chapter to present briefly the 
distinguishing features of these various systems.^ 

THE OBJECTS AND PRINCIPLES OF TAXATION IN 1 796. 

The objects and principles 9f taxation will first be noticed. 
In the following table are presented some of the objects of 

1 The present total expenditures of these same states is $65,000,000. 

2 A system of taxation was inaugurated in Tennessee in 1796, of 
which Wolcott gives no account. The following provisions are found 
in the constitution of 1796: "All lands are liable to be taxed, and they 
shall be taxed uniformly, so that no 100 acres shall be taxed higher 
than another, except town lots. No freeman shall be taxed higher 
than 100 acres of land, and no slave higher than 200 acres. No article 
of manufacture shall be taxed except to pay expenses of inspection." 



118 



TAXATION AS IT IS. 



taxation common to the lists of two or more states. The 
mark in the space opposite the name indicates that the 
object named at the head of the column is taxed in that 
state. 



STATES. 


>< 
< 

H 
g 

s 

i 

2 


o 


o 

11 


< 

Q 

< 

i 


I 

< 


< 

II 


o 
a 

o 1^ 

O f- 

S5 


i 

D 




'i 

< 

a: 
< 


Q 

z 
< 

n 


< 
<5 


Vermont 

New Hampshire 
Massachusetts . 
Rhode Island . 
Connecticut . . 


X 
X 
X 
X 
X 


X 
X 
X 
X 


X 


X 
X 
X 

X 


X 

X(«) 


X 
X 


X 
X 
X 


X 

X 

X 




X 






New York . . . 
New Jersey. . . 
Pennsylvania . 
Delaware . . . 
Maryland .... 




X 
X 
X 

X 


X 

X(a) 

X 


X 
X 


X 

x(«) 

X 






X 
X 


X 

X 

X 


X 
X 


X 




Virginia 

Kentucky .... 
North Carolina 
South Carolina 
Georgia 


X 
X 


X 
X 
X 
X 
X 




X 

xw 




X 
X 




X 

X 


X 
X 
X 
X 
X 


X 
X 


X 
X 
X 


X 
X 
X 

X 



(a) Annual income from. (d) Except loans to the state or United States. 

(3) Horses only. {e) With few exemptions. 

(c) That is, all property', with certain exemptions. 

From a glance at the above table it is plainly evident that 
the New England states followed one and the same copy, 
though with different degrees of accuracy. The Southern 
states too, it will be noticed, had several features in common 



TAXATION IN jygd. 119 

and peculiar to themselves ; and the Middle states, while 
showing no striking resemblance to one another, were still 
less like either of the other groups. But while a general 
likeness obtained between the members of these three 
groups of states, there was naturally a considerable diversity 
in minor points. The people of one state were further 
removed from those of a neighboring state than they are 
to-day, and though both may have started as colonies with 
the same system of taxation, it is not strange that they 
should have grown apart. 

TAXES ON LAND. 

Before looking at other peculiarities, it will be interesting 
to note the varieties of the land tax, which tax it will be 
seen by reference to the table was common to all the states 
with one exception. In Vermont all lands v>^hich had been 
improved two years and were within enclosure, and in North 
Carolina all lands, excepting town lots, which were assessed 
according to valuation, were taxed uniformly according to 
quantity. In Rhode Island and New York lands, together 
with all other property, real and personal, were taxed ac- 
cording to estim.ated valuation. They were assessed in Mas- 
sachusetts and New Hampshire according to their products 
or supposed annual rents. A peculiarity of this tax in the 
latter state was the arbitrary and variable size of the acre. 
It was not a certain number of square rods, but was a suffi- 
cient quantity of orchard land to produce ten barrels of cider, 
or of arable land to produce twenty-five bushels of Indian 
corn, or of mowing land to produce a ton of hay. A quan- 
tity of land sufficient to support a cow one year was re- 
garded as four acres. In Connecticut no regard was had 
for the value of lands in their assessment, but all were 
assessed uniformly, according to the mode of cultivation or 



120 TAXATION AS IT IS. 

condition, each kind being put in the hst at a fixed rate ; 
as for example, meadow lands at $2.50 per acre. Taxes 
were levied on land in Pennsylvania^ according to a triennial 
valuation, in Virginia according to a permanent valuation. 
The average or relative value of lands in different counties 
or districts was fixed by law in Maryland and New Jersey, 
and this average value multiplied by the number of acres 
therein became the basis of taxation. Within the counties 
or districts, lands contributed to the total sums assessed 
to them in proportion to their value. Lands in Kentucky, 
except town lots, were divided into three classes,^ according 
to quality, and in South Carolina and Georgia were taxed 
uniformly by districts or classes, whether cultivated or not.^ 
Delaware had no direct tax on land, but a tax was levied on 
the income from land in the general income tax.^ 

OTHER PECULIARITIES IN THE VARIOUS TAX SYSTEMS. 

In Vermont all taxes were imposed in proportion to a 
general list of ratable objects with fixed valuations. A tax 
on lawyers, traders, and owners of mills, proportioned to 
their profits, might be added at the discretion of the assess- 
ors ; the planting of orchards was encouraged by an exemp- 
tion from taxation for ten years. 

1 Lands granted to any officer or soldier of the line were free from 
tax during occupancy. 

2 The first was taxed at half a dollar per hundred acres; the second, 
at one-fourth of a dollar; and the third, at one-eighth of a dollar per 
hundred acres. 

^ For example, in South Carolina all tide-swamps not generally af- 
fected by the salts or freshes, of the first quality, were rated at six pounds 
per acre; in Georgia at ^10.39 per acre. 

* Provision was made in this same year for a change in the system 
of taxation, and land was thereafter to be taxed according to valuation. 



TAXATION IN lygd. 121 

New Hampshire's list was somewhat longer, and was 
required to be revised at least once in five years. All stock 
and property of men employed in trades, as well as the 
stock of merchants and traders, were taxed. Mills, wharves, 
and ferries were rated at a twelfth of their net incom.e. 

On the long and detailed list of Massachusetts, in addition 
to objects named above, were shops, mills, industrial works, 
buildings of all kinds of five pounds and upwards, the ton- 
nage of vessels, government securities, stock in bank, and 
plate. 

All property, real and personal, was subject to taxation in 
Rhode Island, New York, and Maryland, though under differ- 
ent regulations and with different exemptions. In Rhode 
Island household furniture, farming utensils, and one-fourth 
of property taken at sea were exempted.^ In New York, as 
has already been noted, no taxes for state purposes had 
been levied for some years, since 1788, and no objects or 
principles of taxation were prescribed ; but all assessments, 
whether state, county, or township, were determined by the 
" discretionary estimates of the collective and relative wealth 
of corporations and individuals." Maryland exempted such 
property as belonged to the state or the United States, 
houses for public worship, burying-grounds, such property as 
belonged to county, college, or county school ; the produce 
of land in the hands of the producer, provisions for the year, 
plantation utensils, working tools of mechanics and manufac- 
turers, wearing apparel, imported goods, home-made manu- 
factures in the hands of the manufacturer, stills, and ready 
money. In this state certain specific taxes were also col- 
lected, viz. : of every attorney for admission to the bar, and 

1 Providence, by a vote of its inhabitants, had abolished the poll tax 
in respect to that town, estates only being taxable. 



122 TAXATION AS IT IS. 

an annual sum thereafter during practice ; on licenses to sell 
liquor, to keep tavern, and to get married. 

The profits of any and all lucrative professions, trades, and 
occupations, except compensation to pubHc office and the 
profits of husbandry and common labor for hire, might be 
taxed in Connecticut. Such a tax on trades and professions 
might, at the discretion of the assessor, be assessed in Penn- 
sylvania, exemptions being granted in favor of ministers, 
mechanics, manufacturers, and schoolmasters; and also in 
South Carolina, those exempted being the same as in 
Pennsylvania, excepting manufacturers. 

Pennsylvania and New Jersey were alike in having certain 
personal taxes : the former levied a tax on all freemen over 
twenty-one years of age ; the latter, on shop-keepers, single 
men who kept horses, and single men who did not keep 
horses. Taxes on furnaces, mills, ferries, and industrial 
works of various kinds were also common to the two. 

Delaware alone had a general income tax, and this was 
levied on income from all sources, uncultivated land, persons 
under twenty-one years of age and apprentices excepted. 
This system seems to have occasioned inconvenience and 
inequality, and a new plan was adopted in 1796 ; but mer- 
chants, traders, mechanics, and manufacturers were still to 
be assessed according to their gains. 

A special tax was placed on ordinaries and houses for 
retailing liquors in North Carolina; in South Carolina, on 
sales at auction, and a double tax on the property of per- 
sons who resided out of the state, except of persons in the 
employ of the state or of the United States and of young 
men sent abroad for education, until the age of twenty-three. 

Georgia placed a tax on foreign wares, liquors, and mer- 
chandise, sold, bargained, or trafficked for ; on the funded 
debt of the United States ; on all negroes brought into the 



TAXATION IN lygb. 123 

State by sea for settlement or sale, except such as are 
brought in from any part of the United States ; on all pro- 
fessors of law and physic ; and on all factors and brokers. 

Exemptions from poll tax were generally granted in favor 
of ministers of the Christian rehgion, presidents, professors, 
and students of colleges, and of the infirm and indigent. 

Maryland, in 1776, declared that the levying of taxes by 
the poll was "grievous and oppressive," and ought to be 
abohshed; and that paupers ought not to be assessed for 
the support of government, but that every other person ought 
to contribute according to his actual worth in real and per- 
sonal property. The property of seminaries of learning, houses 
of public worship, and all lands employed for schools and 
other public pious and charitable purposes, were also gen- 
erally exempted from taxation in the various states. 

The general characteristics of taxation in the states in 
1796, it will be noticed, were, first, that specific objects 
were usually selected for taxation, rather than all property ; 
second, that visible property bore all, or nearly all, the 
burden ; and third, that taxes were usually laid according 
to some fixed and arbitrary rule of valuation, rather than 
according to the selling value of the objects taxed. 

APPORTIONMENT AND COLLECTION OF TAXES. 

The various methods and means of apportionment and 
collection of taxes are next to be noticed. South of Dela- 
ware, all state taxes were laid directly on persons or the 
property of individuals by the state, while in states north 
of Delaware they were assessed to corporations or districts, 
as counties or townships.^ In the former, the assessing and 

^ Taxes in the Northern states are still apportioned among the local 
political units. Taxes in the Southern states are still percentage taxes. 



124 TAXATION AS IT IS. 

collecting officers were appointed by the state executive, by 
the state legislature, by the courts, or by officials receiving 
their commissions from the state ; in the latter, they were 
chosen by the people, who were held responsible for their 
conduct. In the state of Delaware the mean between the 
two was observed ; the taxes were apportioned to the peo- 
ple of the counties, but the counties were not held responsible 
for their collection. The following table indicates the vari- 
ous methods of appointment. Marks made in the upper 
spaces opposite the names of the states refer to assessors ; 
in the lower, to collectors. 



ASSESSMENT OF TAXES. 

In the New England states. New York, and New Jersey, 
listers or assessors were chosen in the annual town meetings. 
The selectmen were the assessors in New Hampshire, and in 
Massachusetts acted as such when assessors were not elected. 
To these officers the inhabitants of the various towns were 
required to return annually, under oath, always under pen- 
alty of increased assessment or fine for omission or conceal- 
ment, a list of the ratable property in their possession. The 
duties of the assessors in Vermont, Connecticut, and New 
York ended when the aggregate lists had been returned to 
the proper state or county authorities. In Vermont the 
selectmen, and in New York the supervisors, then made the 
apportionment, while in Connecticut the collectors were 
directed to collect certain sums, a poundage rate on the lists 
returned by the assessors. But in the other states belong- 
ing to this group, the assessors were further required to 

They are laid by the state, and whatever they yield, more or less, accrues 
to the state treasury. County and local officials are in the South usually 
intrusted with the collection of taxes. 



TAXATION IN ijgb. 



125 





i 

> 


% 

u 

u 

i 

> 


< 

5 

> 


K 
< 

>• 

M 


i 

D 

O 

§ 

8 
>• 


!2 

8 

8§ 
> ^ 

P3 




X 












Vermont 


X 


















X 










New Hampshire 


X 














X 












Massachusetts 


X 














X 












Rhode Island 


X 














X 












Connecticut 


X 














X 












New York 


X 














X 












New Jersey 


X 














X 












Pennsylvania 












X 




X 












Delaware 








X 


















X 


Maryland 












X 












X 




Virginia 




X 
























X 




Kentucky 


X 






















X 




North Carolina 










X 










X 








South Carolina 






X 














X 








Georgia 






X 













126 TAXATION AS IT IS. 

apportion the quotas of state and county tax, together with 
the township tax, among the inhabitants of their respective 
towns according to prescribed rules of assessment. Rhode 
Island was peculiar in ha\dng a state committee of assess- 
ors, somewhat hke the modern board of equalization, 
which went about from town to town, summoning the local 
assessors of each to appear before it with their lists, and was 
empowered to fix, on the best information to be obtained, 
the quota for each. Provision was generally made in these 
states for hearing the grievances of individuals who felt un- 
justly assessed, and power was given the body constituted for 
that purpose to reduce or entirely abate taxes, in cases where 
such a course seemed equitable. 

A general assessment was made in Pennsylvania triennially, 
and served as a basis for valuation. The officers of assess- 
ment w^ere county commissioners, chosen by the people, and 
holding office for three years. The lists of the assessors 
were subject to the alteration and revision of the commis- 
sioners, though the relative value in the townships might not 
be changed. The commissioners also sat as a court of 
appeal in tax cases. 

The counties of Delaware were divided into hundreds, 
and in each hundred an assessor was annually chosen. Lists 
of all taxable persons were furnished the assessors by the 
constables of the hundreds, and opposite the name of each 
inhabitant the assessors, in a general meeting of the county, 
placed his supposed income. These lists thus completed 
were published in the various hundreds, and notice also given 
of the holding of the levy court and court of appeals for 
the county, before which complaints of excessive and unjust 
assessment might be made. 

The legislature of Maryland appointed for each county 
and Baltimore town, five commissioners of the tax. These 



TAXATION IN lygb. 127 

commissioners divided their respective counties into con- 
venient districts and appointed in each an assessor who 
must be worth ^200. The assessors were to inform them- 
selves by all lawful means of the property in their districts, 
and to make returns to the commissioners, who sat as a 
court of appeal. 

The annual assessment was made in Virginia by commis- 
sioners of revenue, appointed by county and corporation 
courts, sheriffs and collectors who had not settled their 
accounts being ineligible. They received from the com- 
missioners of the previous year the books, with the perma- 
nent valuation of lands, in which were noted all alterations, 
aHenations, divisions, and additions. Lists of ratable per- 
sonal property were to be returned at a certain time to these 
commissioners, who made an abstract of all property, real 
and personal, and returned the same to the collector or 
sheriff. The permanent valuation was made in 1781 by 
three commissioners from each county, appointed by the 
justices. But as these commissioners were independent of 
one another, there were many inequalities in the valuations 
of the several counties. For this reason the counties were 
arranged in four districts, reference being had to soil and 
situation. To effect this equalization, two commissioners 
were appointed in 1782, and the valuation thus equahzed 
became the basis for future assessments. 

The county courts divided the counties of Kentucky into 
districts, and appointed a commissioner for each. By the 
commissioners the class to which land belonged was deter- 
mined, lists of ratable objects collected, and returns made 
to their respective county courts, which had power to cor- 
rect mistakes and relieve grievances. 

In North CaroHna the justices of the peace were appointed 
by the county courts to receive returns of taxables in each 



128 TAXATION AS IT IS. 

district. They were usually aided by the captains of militia, 
who advertised musters, to which the people came with writ- 
ten lists of their property. These returns were exhibited by 
the justices to the county court, together with the names of 
those who had failed to comply. The valuation of town 
property was made by three freeholders, appointed annually 
in each town by the county court. 

The assessors and collectors were the same persons in 
South Carohna, and were appointed by the legislature. 
They determined the class to which lands belonged, re- 
ceived lists of ratable personal property, and made assess- 
ment on business and income. The lists, when completed, 
were exposed in the parish in a public place for ten days, 
during which period the taxes must be paid. 

A receiver of tax returns was appointed in Georgia for 
every county by the legislature. The receivers were required 
to give notice to each captain's district of the times and 
places at which they would receive tax returns. They were 
to be furnished by the commanding officer of each company 
with lists of persons liable to taxes, and were to attend at 
least three days in each district. 

COLLECTION OF TAXES. 

The collectors, like the assessors, in New England, New 
York, and New Jersey, were elected annually in the town 
meeting by the people.-' In Pennsylvania they were 
appointed by commissioners elected by the people ; in 
Maryland, by commissioners appointed by the legislature ; 
in Delaware, by the state treasurer ; in Virginia, by the 
governor; in Kentucky, by the people; in North Caro- 
lina, by the county courts ; and in South Carolina and 

1 In New Hampshire they were either thus elected, or appointed by 
the selectmen. 



TAXATION IN lygd. 129 

Georgia, by the legislature. The office of collector was, 
in many cases, attached to some other office. In Ver- 
mont, for example, the first constables were ex officio col- 
lectors ; in Maryland and Kentucky the sheriffs were gen- 
erally collectors ; ^ and in North Carolina and Virginia the 
sheriffs were such ex officio, being appointed, in the latter 
state, from a list of justices recommended by each county. 

Though the collectors in Vermont and Massachusetts 
were chosen but for one year, their powers continued until 
a final settlement was made, and in case of death after 
the term for which elected their responsibilities and obhga- 
tions descended to their administrators and executors. In 
Connecticut their powers continued but three years. Simi- 
lar customs were probably in force in other states. 

As has already been noticed, in states north of Delaware 
the towns were the collection districts, and hence were re- 
sponsible for deficiencies on the part of their collectors. In 
some instances, the treasurer of the county or state was per- 
mitted, in event of delinquency or insolvency of the collector, 
to collect the amount of deficiency from the selectmen or 
from individuals of the town, if need be by distraining goods 
and chattels. The latter were of course permitted to in- 
demnify themselves by laying a new tax upon the town. In 
other states, the counties, though frequently divided for 
convenience, were the collection districts, and the collectors 
were as a rule responsible to state authorities. 

The collectors in the first group of states were generally 
permitted to distrain and sell goods and chattels — certain 
things, such as implements of trade, work-horses, etc., being 
excepted — of those delinquent in paying their taxes. If 
these, however, were insufficient, the delinquents might be im- 
prisoned ; or if they had escaped, their lands might be seized. 
1 The sheriffs are still the collectors in Kentucky. 



130 TAXATION AS IT IS. 

JLn other states the collectors merely returned the names of 
delinquents, and summary measures were taken by other 
authorities. In Maryland unpaid taxes became, in absence 
of goods, a charge on the land ; in New York and New Jer- 
sey, they were added to the next year's list. The land of 
non-residents became, in South Carolina, the property of the 
state if taxes remained unpaid after certain notice. Bonds 
and sureties were generally required of collectors. 

COMPENSATION OF ASSESSORS AND COLLECTORS. 

As to the compensation of assessors and collectors, the 
following have been noted : in Vermont the assessors re- 
ceived one-half of the taxes from double assessments, per- 
haps in addition to certain other remuneration ; in Massachu- 
setts, 4 shillings per day ; in Rhode Island and New Jersey 
if per cent, of amount of taxes assessed ; in New York, their 
fees were determined by the supervisors ; in Pennsylvania, 
they received ^i.oo per day; in Maryland, not over ;^25 
per year ; in Georgia, 2^ per cent, of tax assessed, plus 6\ 
cents on every poll without property. 

The collectors received in New Hampshire usually 4 or 5 
per cent, of collections ; in Massachusetts, from 3 to 5 per 
cent. ; in Rhode Island, regularly 5 per cent. ;^ in Connecti- 
cut, 2^ per cent, and travelling fees ; in New York, 5 per 
cent. ; in New Jersey, previous to 1 794, if per cent., after 
1 794, 4 cents per poll ; in Pennsylvania, 5 per cent. ; in Dela- 
ware, 7-|- per cent. ; in Maryland, 4 per cent., and such sums 
as seem uncollectible ; in Kentucky, 5 per cent. ; in North 
Carolina, 6 per cent., with certain additional fees ; in South 
Carolina, 5 per cent. ; and in Georgia, 5 per cent., with 
certain fees. 

1 Though, in consequence of competition for the office, encouraged 
by the state, the sum received had been reduced to t,\ per cent., and 
in some cases to 2j per cent 



CHAPTER III. 

THE TRANSITION PERIOD. 
GENERAL REMARKS. 

WE may, for lack of a better designation, call the 
period from 1796 to the beginning of our Civil 
War, a transition period. It witnessed the complete estab- 
lishment of the American system of state and local taxation. 
The distinguishing feature of the system may be described 
in a single sentence. It is the taxation of all property, mov- 
able and immovable, visible and invisible, or real and per- 
sonal, as we say in America, at one uniform rate. This is 
the only direct tax known in most of our commonwealths, 
and it is only recently that certain special forms of taxation 
have assumed greater importance in some of our state 
budgets than this. 

The fundamental idea of our tax systems is a democratic 
one. It is, that all should contribute to the support of gov- 
ernment in proportion to their capacity or " respective abili-] 
ties," as Adam Smith expresses it. It is, however, assumed! 
that one's ability to contribute to the support of governmentj 
is measured by the actual selling value of all one's property, \ 
real and personal ; then it is further assumed that it is pos- ( 
sible in each case to discover the actual selling value of all 
the property of citizens and other residents. 

The last chapter shows that in 1 796 specific kinds of prop- 
erty were taxed, and in some cases the collective mass of 



132 TAXATION AS IT IS. 

property. The general practice appears to have been, how- 
ever, to tax only a few main species of property, and rough 
kinds of devices were used for valuation. Horses and cattle 
were valued at a definite sum each, and agricultural lands 
were often classified and valued at so much for each acre of 
each class. Persons were taxed by the poll uniformly, and 
were also estimated according to their earning capacity, 
and taxed accordingly. President Francis A. Walker in his 
" Political Economy " ^ reaches the conclusion that faculty, 
the power of production, constitutes the only theoretically just 
basis of contribution ; that men are bound to serve the state in 
the degree in which they have the ability to serve themselves. 
Taxation according to faculty is, however, rejected as imprac- 
ticable, but in earlier and simpler times it was practised in 
the American Colonies. 

The reasons why these earliest methods were abandoned 
are sufficiently evident. They were adapted only to a primi- 
tive condition of society. When the classes of wealth be- 
came more numerous, and when the differences in value 
between articles of the same class became more important, 
when one acre of land was often worth ten or twenty times, 
or even fifty times, as much as another situated in the same 
commonwealth, there could not fail to arise a demand for a 
system of taxation which would adjust the burdens of the 
government more accurately and make them bear upon 
each individual more nearly in proportion to his ability. It 
seems that our present system of taxation arose with this in 
view, and in our older American commonwealths, very gen- 
erally, during the first half of the present century ; while the 
newer states simply copied the institutions of the older. 

The details of the changes in the various states are difficult 
to discover, owing to the inaccessibility of many public docu- 

1 New unabridged edition, § 595. 



THE TRANSITION PERIOD. 133 

ments, but it has been possible to gather together the main 
facts about several states, which, there is every reason to 
believe from what can be discovered, were merely typical. 
A few words will be devoted to Connecticut and Ohio, and 
some facts will then be presented regarding other states. 

CONNECTICUT. 

The old colonial system of taxation continued in Con- 
necticut until the adoption of the constitution of 1819. It 
was the practice to follow the plan still in vogue everywhere 
in Europe, and also in the city of Quebec, Canada, of basing 
taxation, not on the selUng value of property, but upon its 
probable net revenue. We tax property now in our American 
commonwealths on the selling value of property ; but the 
European system and the old Connecticut system was to 
estimate income itself, directly. It was also the practice in 
Connecticut to estimate the annual income of those pur- 
suing any trade or occupation, and to tax them accordingly. 
The plan is described in the following words in the ^' Report 
of the Special Tax Commission of Connecticut," made in 
January, 1887 :^ — 

'' Those pursuing any trade or profession were assessed on 
an estimate of their annual gains. Real estate was rated, 
not according to its value, but in proportion to the annual 
income, which, on the average, it was deemed Hkely to pro- 
duce. Lands as distinguished from buildings were put in 
the Hst at a fixed rate for each kind, prescribed by statute. 
The best meadow-land went in at 1^2.50 an acre ; plough- 
land, at $1.67; pasture, at $1.34; wood-lots, at 34 cents, 
etc. ; not because those sums were deemed to be the value of 
the lands, but because they were thought to represent the 

1 Pages 9 and 10. 



134 TAXATION AS IT IS. 

average income they would produce. Houses and other 
buildings were likewise listed at fixed sums, determined 
by their size, materials, number of fireplaces, etc., but all 
described by the statute itself, and beyond the control of 
the assessors. Under such a system there was little oppor- 
tunity for evading taxation. The acreage of each farm, the 
general character of each lot, and the dimensions, use, etc., 
of each building, were readily ascertained, and the law then 
fixed the rate of assessment." 

Property was taxed according to its selling value, and not 
according to its probable income, after 1819 ; but only cer- 
tain classes of property were taxed, and there were different 
rates for real estate and personal property, the former being 
assessed at only half the rate at which the latter was assessed. 
Before 1850 real estate was listed at only three per cent, of 
its value, while personalty was listed at six per cent, of its 
value; but in 1850 all property was made ratable at three 
per cent, of its true value. It was provided in i860 that all 
property should be assessed at its true value. The present 
financial system of Connecticut may be said to date from 
the years 1850 and 185 1, when it was provided that all 
property not specially exempted should be taxed, and when 
personal taxation was restricted to its most injurious form, 
the capitation tax. 

OHIO. 

Land was divided into three classes, according to "quality," 
and there were three rates of taxation per hundred acres ; 
one for land of the first quality, another for land of the 
second quality, and still another for land of the third quality. 
This method of taxation continued until 1825, inclusive. 
These rates in 1800 were ^0,85, $0.60, and ^0.25 per hun- 
dred acres, according to quahty. The rates in 1825 were 



THE TRANSITION PERIOD. 135 

$1.50, ^1.12^, and ^0.75, respectively. During this period 
the highest rates are found in the year 18 16, when they 
were $3.75, $3.00, and ^2.00, respectively. 

Until 1826, in Ohio, it was found necessary to tax only 
real estate for state purposes. Funds for county purposes 
were derived from a poll tax, and a tax upon horses, mules, 
and cattle, to which was added by legislative appropriation, 
a percentage from one-fifth to one-half, varying with the 
several years, from the taxes levied upon real estate. 

The tax laws passed in 1825 and 1831 show how much 
more diversified property was becoming. These acts enu- 
merate for taxation, lands and town lots, including buildings, 
horses, cattle, pleasure carriages over ^100 in value, mer- 
chants' and brokers' capital, money at interest, all grist and 
saw mills, all manufactures of iron, glass, paper, clocks, and 
nails, all distilleries, breweries, tanneries, all iron, brass, and 
copper foundries. 

One feature of the early Ohio system is specially note- 
worthy. February 3, 1825, an act was passed entitled "An 
Act establishing an equitable mode of levying the taxes of 
this state." ^ The only animals subject to taxation were 
" all horses, mules, asses, and all neat cattle three years old 
and upward." Section 15 provided that land should be 
valued " luithout taking into consideration the value of the 
actual improvements made thereon^ ^ 

Dwelling-houses over the value of ^200 were valued at 
their true value in money, " but few of our country houses 
were at that time rated above that sum." All horses, mules, 
and asses were assessed at $40, and all neat cattle at $Z per 
head. These provisions were not changed in the revision 

1 25 Ohio Laws, page 58. 

■^ Land was taxed in Kentucky at the beginning of the century with- 
out regard to improvements. 



136 TAXATION AS IT IS. 

of 1 83 1, but continued in force until 1846, when the present 
system of taxation was introduced. 

The essential point is the exemption of improvements. 
A man was not made to pay what seems to many like a 
penalty for adding to the wealth of the country. I have 
received a letter on the subject of early Ohio taxation from 
a gentleman, then a resident of the state, since a judge on, 
the Supreme Bench of another state, and now the head of a 
law school, from which I make these quotations : ^ " The 
result of rating farm lands unimproved was beneficent, and 
large bodies of land were held in Northern Ohio, where I 
lived, by non-residents ; and they generally held on to their 
land until pioneers, by improving neighboring farms, ren- 
dered this land valuable. In respect to the naked value of 
the land, they received equal benefit from the labor of these 
pioneers, and should not complain if their land was taxed 
equally. The effect^ was to induce them to sell to those 
who would use the land, improve it, and obtain a profit 
from it by way of production, and not simply by rise in 
value. It thus contributed to the more rapid settlement 
of the state. It also tended to discourage farmers from 
buying more land than they could use. Another feature 
of the general tax act had a good effect. I refer to the fact 
that all horses were listed at one price, and so of horned 
cattle. The farmers were thus encouraged to raise good 
stock only. Taxation upon actual value depresses industry, 
especially efforts to excel. Barns, fences, fine fields,^ good 
ploughs, harness, etc., were not taxed at all ; and if the 

1 I must also acknowledge my indebtedness to my good friend 
Professor George W. Knight, of the University of the State of Ohio, who 
has sent me copies of the old tax laws. 

2 That is, of the new tax law. 

3 Evidently meaning fields rendered fine by improvements. 



THE TRANSITION PERIOD. 137 

farmer should raise a team worth from ^300 to ^600, as 
any one can do, he paid no more tax than for a crowbait 
pair of horses worth $50, which he should never be per- 
mitted to raise or keep. In raising neat cattle, also, the 
uniform assessment of ^8 encouraged him to have the best." 



OTHER STATES. 

Maryland introduced the present system of taxation in 
1 84 1, when, after an interval of years, it was again necessary 
to have recourse to general taxation for state purposes. The 
present direct tax on the value of all property seems to have 
obtained for local purposes since the framing of the consti- 
tution of 1776. It may be remarked incidentally that reg- 
ular taxation in Europe appears generally have been first 
introduced in cities, as might naturally be expected from 
their more advanced industrial situation and the earlier ne- 
cessity for them to abandon old methods of personal service 
and payment in kind, and on account of their larger public 
needs. So in this country there appears to have been little 
serious thought of ever abolishing local taxation, even in 
those states which were able for a time to live without gen- 
eral taxation. 

Virginia, including what is now West Virginia, adopted 
the main features of its present method of taxation in 1852, 
when a new constitution went into effect. Before that time 
the only tax on invisible property was a small one on divi- 
dends and interest.^ 

New Hampshire taxed visible objects, and included in- 
comes in 1772; but no other changes, except in detail, 

1 See " West Virginia Tax Commission Minority Report," by Joseph 
Bell, 1884, page 21. 



138 TAXATION AS IT IS. 

were introduced before the Civil War, when all property 
was made taxable.-^ 

All real estate not especially exempted, all personal 
estate, shares of stock in incorporated companies and 
banks, incomes from professions, trades, and occupations 
(except farmers), and bank stock, were made subject to 
taxation, both for state and county purposes, in Pennsyl- 
vania in the year 1841.- 

I have been unable to iind the date of the change in 
Massachusetts, probably because it was not sufficiently 
marked to attract the attention of those who have re- 
\'iewed taxation in that state. The list of ratable prop- 
erty', which was in 1796 so long as to include almost 
everything, might be made general without makiag many 
changes in the laws of taxation. 

In the Louisiana constitution of 1845 it was pro\'ided that 
after 1848 property should be taxed according to value. 

The constitutions of all the Southern states, adopted after 
the close of our late war, provided for the taxation of all 
propert}- according to its selling value. It is, then, safe 
to say that, at the close of our late Cidl War, our property 
tax was in force ever}n\'here, and the transition period fully 
terminated, ^^^lile I have not found all the facts which I 
could desire, I have found none which would not harmonize 
with this statement. 

1 See report of Hon. George T. Sawyer on " Taxation," made to the 
legislature of New Hampshire in 1876. 

2 See Worthington's " Sketch of the Finances of Pennsylvania," 
page 58. 



THE TRANSITION PERIOD. 139 

REASONS FOR THE TAXATION OF ALL PROPERTY AT ONE 
UNIFORM RATE. 

One reason why our present system of taxation was uni- 
versally introduced may be found in the progress of demo- 
cratic thought. It was desired that all should contribute 
in proportion to their abilities. It was observed that the 
forms of property had increased rapidly in number, and 
that the old specifications of property to be taxed failed to 
reach large masses of wealth ; and this produced dissatis- 
faction and irritation. The sentiment to-day, all over the 
Union, in favor of the taxation of all property is very strong. 
The constitution of Ohio, adopted in 185 1, best gives ex- 
pression to prevaihng sentiment when it expressly provides 
that even state and local bonds shall never be exempted 
from taxation. It is of no avail to talk about abolishing 
taxes on personal property, as some do, unless something 
is substituted for the personal property tax, so unalterable has 
become the determination to tax every one in proportion to 
his ability. This is one of the first facts to attract the atten- 
tion of the student of American finance. 

The new classes of property which modern inventions 
and discoveries and the industrial revolutions accompanying 
them have produced are one of the striking facts in our finan- 
cial situation, and it can never be safely left out of view by 
the practical legislator. Early in this century, it should be 
remembered, there were comparatively few banks ; ^ there was 
not a single railroad company, and of course none of that mass 
of easily concealed property based on railways, such as stocks 
and bonds ; there was not a telegraph or telephone com- 
pany, nor were there any traces of that property which con- 

1 Wlien Hamilton wrote his report on the proposed United States 
Bank, in 1 790, there were but three in the United States, 



140 TAXATION AS IT IS. 

sists of their evidences of indebtedness ; there was not one 
gas company ; there was not one street-car Hne ; and the 
manufacturing corporations of our day had scarcely begun 
to exist. 

Some way must be contrived to make owners of these new 
kinds of property, who include most of our wealthiest citi- 
zens, pay their due share of taxes. It was possible to go on 
with old methods when the rates of taxation were low, as 
before the war, because public burdens were so light that it 
scarcely seemed worth while to trouble one's self about 
them. The town population was small, and most people 
paid only state and county taxes, and township taxes suffi- 
cient to meet the needs of rural districts. Rates of taxation 
of one, two, and three per cent, are not now unusual, as will 
be seen later ; but in Virginia, in 1 796, a tax of one-fourth 
of one per cent, on the assessed value of land, which was 
fixed once for all, and must have been below its true value, 
was sufficient. Some states had no state tax; and others 
taxed land at a small sum per acre or per hundred acres, as 
for example, Ohio and Connecticut, for which the rates have 
been mentioned, and Kentucky, where the best land was 
taxed only a half of a dollar for a hundred acres. 

A committee was appointed by the General Assembly of 
Connecticut in 1844, to inquire into the subject of taxation ; 
and it reported in favor of the abolition of the State Board 
of Equalization, because it was a clumsy contrivance, and 
the state tax was so inconsiderable that it made little dif- 
ference whether property in different parts of the state was 
assessed at the same proportion of its actual value or not. 
Now the state tax is ten times as great as it was in 1844.-^ 

The municipal tax rate in the city of Baltimore in the 
same year was 70I cents on the $100, and the amount 

1 "Report of the Special Tax Committee of Connecticut," 1878. 



THE TRANSITION PERIOD. 141 

'' collected within the year upon the levy for that year " was 
il>254,394.87 ; whereas in 1884 the rate was ^1.60, and the 
amount collected within the year on the levy for the year 
was $2,774,073.84, over ten times as much,^ 

Part IV. will give additional data about expenses of states 
and local political units at present and in past times. 

DISSATISFACTION EARLY MANIFESTED. 

The existing method of assessing and taxing property was 
better adapted to the first half of the nineteenth century 
than to the second half, because taxation was less important, 
and also because property could more readily be found. 
This follows from the difference in the kinds of property 
which existed in earlier times and at present, and also from 
the fact that people were less migratory and cities smaller, 
for in cities property can more readily be concealed than in 
villages and in the country. Formerly people were required 
to tell what their neighbors were worth, and the proportion 
between the property of their neighbors and their own — 
which could not well be done at the present time. A curious 
illustration of older methods is furnished by Rhode Island. 
The first real tax law was passed in 1673, and in this it was 
provided that " if the Assembly judge any have undervalued 
their estates, each shall be required to give in to the treas- 
urer a true form of an inventory of all their estate and 
strength in particular, and give in writing what proportion 
of estate and strength in particular he guesseth ten of his 
neighbours, nameing them in particular, hath in estate and 
strength to his estate and strength." ^ 

No sooner, however, were existing methods introduced, 

^ See " Report of the Baltimore Tax Commission," 18S6, Appendix. 
2 Mr. H. B. Gardner's monograph. 



142 TAXATION AS IT IS. 

than wide-spread dissatisfaction became manifest on account 
of inequalities in the adjustment of the burdens of taxation, 
and attempts were made to remedy this. 

This dissatisfaction has increased without interruption up 
to the present time, and every year renders our existing 
methods of assessing property, and of taxing it, more intoler- 
able. The endeavors to improve upon actual methods have 
been frequent and are daily increasing in frequency; but 
they usually prove fruitless or render a bad matter worse, 
because those who make them have failed to go to the root 
of the evil, which is the system itself. The truth is, the 
existing system is so radically bad, that the more you 
improve it, the worse it becomes. This lies in the nature of 
things, and nothing any legislature can do can alter this 
condition of things. Experience and reason alike teach 
this, and in my opinion place it beyond controversy for all 
those who have eyes to see what is passing about them every 
day of their lives. 

There was comparatively little personal property in 
existence one hundred years ago. Only in the present 
century has that species of property, at first gradually, then 
very rapidly, assumed the enormous proportions to which 
we are now accustomed. This growth has accompanied the 
development of cities, which are the home of invisible per- 
sonal property. Where the population is chiefly rural, there 
can be comparatively little personal property, and a large 
part of what does exist is visible and easily found. 

When our first census was taken in 1790, about one in 
thirty of our population was a resident of a city, but since 
then the urban population has steadily gained on the rural 
population, until now one-fourth of the population is urban. 
The following table, taken from the last census report on 



THE TRANSITION PERIOD. 143 

population, shows the movement of population towards the 
cities from 1790 to 1880 : — 

Inhabiiants of the cities 
Date. in each 100 of the 

total population. 

1790 z-z 

1800 3.3 

I8I0 4.9 

1820 4.9 

1830 6.7 

1840 8.5 

1850 12.5 

i860 16. 1 

1870 20.9 

1880 22.5 

There is every reason to expect a continued concentration 
of population in cities, and a rational scheme of taxation 
will keep this movement in view. 

Personal property has increased relatively more rapidly 
than real property, until now it is regarded as its equal in 
value in most of our American commonwealths. This would 
seem, however, to be a low estimate, if we may regard the 
estimate of an Enghsh writer^ on finance, in regard to 
England, as at all trustworthy; for as early as 1869 he es- 
timated the value of personal property in England at double 
that of real property. 

THE NATURE OF THE DIFFICULTY. 

The reason why our present system of taxation does not 
operate satisfactorily can be stated in a word : although it is 
on the face of it fair and simple, it is found in practice to be 
an impracticable theory, for a large portion of property 

1 Dudley Baxter. 



144 TAXATION AS IT IS. 

escapes taxation, and that, the property of those best able 
to bear the burdens of government, namely, the wealthy 
residents of cities. On the one hand, it is impossible to 
find this property, and to force men to make returns under 
oath, results invariably in perjury and demoralization, with- 
out discovery of property ; on the other hand, federal laws 
over which our states and municipalities have no control, 
enable many to escape taxation by investments, often tem- 
porary, in federal bonds, exempt from taxation. 

Personal property is sometimes discovered in its entirety, 
but it is then nearly always the property of the compara- 
tively helpless, namely, widows and orphans, whose posses- 
sions are a matter of public record. Less often a burden is 
imposed upon the conscientious. Thus, I happen to know 
of one wealthy town of a few thousand inhabitants, where 
three men of conscientious convictions with regard to a citi- 
zen's duty to the commonwealth, pay taxes on their person- 
alty, although they have as good an opportunity to escape 
as others. This state of things naturally produces dissatis- 
faction on the part of farmers and other hard-working 
people, who feel that personalty ought to bear a share of the 
burden of taxation. On this account they suggest various 
things, like taxation of mortgages and a more vigorous 
search for hidden property. Their aim, as I have said, is 
commendable, but to attempt to reach the desired goal by 
direct means, under existing laws, or any laws which do not 
imply a change of the system of taxation, is as Utopian as 
the dream of the most radical socialist. If we desire to 
accomplish a purpose we must use means adequate to the 
end in view. 

As there is a general misapprehension of the facts of the 
case, and as it is desirable to abandon at once all fruitless 
efforts to realize a Utopia, it is well to interrogate past expe- 
rience and reason. 



THE TRANSITION PERIOD. 145 



THE TESTIMONY OF EXPERIENCE. 

I have first to remark that the one uniform tax on all 
property as an exclusive source of revenue, or the chief 
source — the main feature in direct taxation — never has 
worked well in any modern community or state in the entire 
civilized world, though it has been tried thousands of times, 
and although all the mental resources of able men have been 
employed to make it work well. I have read diligently the 
literature of finance to find one example, but in vain, and 
lest this should not be sufficiently trustworthy, I have made 
it my business, in my capacity as tax commissioner, to visit 
typical states and cities and to make inquiries in person, of 
citizens as well as of officials intrusted with the adminis- 
tration of the laws. I have visited Charleston, South Caro- 
lina ; Savannah, Atlanta, and Augusta, Georgia ; Columbus, 
Ohio ; Madison, Wisconsin ; Toronto, Montreal, and Que- 
bec, Canada; and the result has been abundantly to con- 
firm all that I have said about the impracticability of the 
one uniform tax on real and personal property. The expe- 
rience of two or three states with the single direct tax on all 
property will be told in the following chapters. 



CHAPTER IV. 

EXPERIENCE OF OHIO. 

PROBABLY the most vigorous effort to apply present 
methods may be found in Ohio, and to the experi- 
ence of Ohio I will accordingly devote some considerable 
space. ^ 

The Ohio system is the Maryland idea perfected, though 
perfected seems the wrong word to use ; for, as already re- 
marked, it is characteristic of this system that the more you 
perfect it, the worse you make it. However, it is a vigorous 
attempt to carry the Mar^^land idea into practice. 

CONSTITUTIONAL PROVISIONS. 

It may be remarked in general of the Ohio constitution, 
that it imposes excessive limitations upon the legislative 
power. It prescribes too many things, for it was drawn up 
at a time when becoming alarmed at abuses of power, people 
were more inclined to abolish or restrict power than to learn 
how to use it properly ; as sensible a proceeding as that of 
the mother who wished her boy to learn to swim, without 

1 It may be proper to state first that on my arrival in Columbus I 
was taken to the office of the Governor, Hon. Joseph B. Foraker, by 
my friend, Rev. Washington Gladden; that I was courteously received 
by the Governor, and by him introduced to other gentlemen whom it 
seemed desirable that I should meet, and every facility given me for 
the prosecution of my inquiries. Special mention should be made of the 
courtesy of Hon. Emil Kiesewetter, Auditor of State, who explained at 
length every point in the system of taxation which is under his control. 



EXPERIENCE OF OHIO. 147 

incurring the danger of drowning in the water. The result 
is, that having shorn themselves of control over finance, the 
sinews of war, the people have often engaged in an unequal 
contest with vast corporations not subject to like Hmitations. 
This remark applies to the state of Maryland, where we find 
the state not able to borrow money for the maintenance of 
the Chesapeake and Ohio Canal, while no restrictions are 
imposed upon the borrowing powers of railway corporations, 
which may be rival enterprises. Unless the people dare 
to trust themselves in financial matters, they must always 
expect to be worsted in contests of this kind. Liberty is 
illusory for those who fear to trust themselves. 

The most general provision of the constitution of Ohio, 
on the subject of taxation, is found in sections 2 and 3, 
Article XII., which reads as follows : — 

''Stc. 2. Laws shall be passed taxing (i) by a uniform 
rule, all moneys, credits, (2) investments in bonds, stocks, 
(3) joint stock companies or otherwise ; and also all (4) real 
and personal property, (5) according to its true value in 
money; (6) but burying-grounds, pubhc school-houses, 
houses used exclusively for public worship, institutions of 
purely public charity, pubhc property used exclusively for 
any public purpose, (7) personal property to an amount not 
exceeding in value $200 for each individual, may, by general 
laws, be exempted from taxation ; but all such laws shall be 
subject to alteration or repeal, and the value of all property 
so exempted, shall, from time to time, be ascertained and 
pubhshed as may be directed by law. 

" Sec. 3. The General Assembly shall provide by law for 
taxing the notes and bills discounted or purchased, moneys 
loaned, and all other property, ( i ) effects or dues, of every 
description (without distinction), (2) of all banks, now exist- 
ing, or hereafter created, and of all bankers, (3) so that all 



148 TAXATION AS IT IS. 

property employed in banking shall always bear a burden of 
taxation equal to that imposed on the property of indi- 
viduals." 

It is also provided that the state may create a debt to 
supply casual deficits or failure of revenue, to the amount of 
$750,000, but for no larger amount, and that no debt shall 
be contracted for any internal improvement. This renders 
it necessary that private corporations should carry out all 
future internal improvements, or that such work should be 
done by the local pohtical units of the state, though it will 
happen at times that an internal improvement is not suitable 
for a local government, while it is not desirable to intrust it 
to a private corporation. 

Special municipal legislation is further forbidden by the 
constitution ; but as it is so necessary under the Ohio system, 
which provides for minute particulars of local finance, to 
pass different laws for different cities, according to their size, 
character, and peculiar needs, cities have been divided into 
classes, and these again into grades ; and as only one city 
may be found in a given grade of a given class, in legislating 
for that grade, the legislature is, after all, making laws for a 
particular city. The practical necessity which compelled 
recourse to this subterfuge shows the absurdity of these 
minute and injurious constitutional restrictions. 

The methods of assessing real and personal property must 
now be outlined. 

REAL ESTATE. 

Real estate is assessed once in ten years,^ and in the fol- 
lowing manner. The county commissioners divide the 
county into assessor's districts, and one assessor is elected 
for each district. 

1 The last assessment took place in 1 880. 



EXPERIENCE OF OHIO. 149 

The county auditor, who is at the head of the county 
system of taxation, as the state auditor is at the head of 
the state system, furnishes to the assessor of each district 
a description of each tract and lot of property in the dis- 
trict, the name of its owner, the number of acres it con- 
tains, etc. If necessary, the county commissioners may ad- 
vertise for bids for the construction of suitable maps for this 
purpose. 

Each district assessor must value real estate after careful 
examination ; and in case the owner cannot or will not give 
all necessary data, he may cause a survey of the land to be 
made at the owner's expense. 

The assessor must note in his plat-book the value of all 
houses, mills, and other buildings, which exceed ^loo in value, 
the number of acres of arable or plough land, the number of 
acres of meadow and pasture land, also of wood and uncul- 
tivated land in each tract. Each tract is to be valued sepa- 
rately "at its true value in money, excluding the value of crops 
growing thereon ; but the price for which such real property 
would sell at auction or at forced sale, shall not be taken as 
the criterion of the true value." 

The county auditor must correct returns from time to 
time on account of new buildings or destruction of buildings. 

As the assessment in each county is under the control of 
one man, the valuation is generally uniform as between the 
various parcels of real estate within a county. The county 
auditor of Franklin County, in which Columbus is situated, 
at the time of last assessment, which took place in 1880, re- 
quired all assessors to meet in his office once in two weeks 
to compare notes and to secure the adoption of uniform 
methods. A comparatively uniform assessment of property 
was thus secured in Frankhn County. 

The valuation as between the various counties is not uni- 



150 TAXATION AS IT IS. 



I form, but real property is valued all the way from seventy-five 
I per cent, of its true value down to twenty-five per cent. A 
state board of equalization is elected, whose duty it is to see 
that property in all parts of the state is equally assessed ; 
and right here we encounter a difficulty. Each member of 
the board is elected from a -senatorial district, and he feels 
that he represents his constituents and not the state of Ohio, 
as the law contemplates ; consequently each tries to reduce 
the assessed valuation of the part of the state which he repre- 
sents, all oaths to the contrary notwithstanding. We have 
here t^vo clearly marked defects which should be avoided. 
The constitution of boards concerned A^ith taxation should 
not be of such a nature that each must naturally feel that he 
represents a particular locality ; second, appointed tax offi- 
cials are on the whole preferable, for elected officials always 
fear influential persons and do not assess them for so much 
as they know they should. I was told in Columbus about 
one conscientious official who tried to carry out the law, and 
place all property upon the tax duphcate. The only com- 
ment made was this : '"'He was never re-elected 1 " ^ 

Another somewhat similar case came to my notice in New 
York. Faithful local assessors were dihgent and successful 
in finding property for some time ; whereupon some of the 
moneyed men of the place drew up a petition for the aboH- 
tion of the local board of assessors and canvassed for signa- 
tures, with the demagogical plea that the local board involved 
a needless v/aste, and that property could just as well be 

1 The Connecticut special tax commissioners narrate the experience 
of an assessor in that state, who, by diligent search, succeeded in finding 
$200,000 of intangible personal property, such as railroad stocks and 
bonds, and money at interest, and added it to the grand list, and he 
writes to the commissioners, " that may have had something to do with 
my defeat when election came around." Report, 1881, page 23. 



EXPERIENCE OF OHIO. 151 

taxed on the general assessment for state and county pur- 
poses. Many signatures were received before people seemed 
to realize the character of the undertaking. The petition 
was taken to Albany, and the board abolished by the legis- 
lature. 

Another defect of the Ohio system is noteworthy, espe- 
cially for us in Maryland. The assessment of property once 
in ten years is not often enough, and owing to changes in 
value it leads to injustice as between citizens. The gov- 
ernor used these words on this subject in his annual mes- 
sage, dated Jan. 4, 1887: "The last decennial appraise- 
ment of real estate was had at a period of great prosperity ; 
it was a time of general high values ; since then there has 
been a heavy decline ; farm property is from twenty-five to 
fifty per cent, cheaper to-day than it was then. The con- 
sequence is, that farming lands of the state, where they have 
not been affected by the growth of cities or other develop- 
ment, are now taxed on the average more nearly at their 
full value than any other class of property. In fact, the 
farm lands of some of the counties are taxed at even more 
than they could be sold for. But while this is true of the 
farm lands, the reverse is true of the real estate of many of 
the cities of the state where there has been growth and 
development, as in some portions of Cincinnati and in 
Cleveland, Toledo, Columbus, and many other cities that 
might be named. The valuations placed upon the real 
estate of these cities in 1880 are in the aggregate fifty per 
cent, of their present true value in money, and in some 
cases they will not exceed twenty-five per cent. 

"The consciousness of this lack of uniformity, and the 
consequent injustice that must result to all who are fairly 
taxed, has had much to do in producing the unsatisfactory 
results that are experienced." 



152 TAXATION AS IT IS. 

This passage from the message of the governor of Ohio 
shows the desirabihty of more frequent assessments. An 
assessment once in ten years is not often enough in any 
American state, because our values fluctuate so rapidly. 
When assessments are made only at rare intervals, a por- 
tion of the burdens of the state and local government is 
taken from those who have been specially prospered, — that 
is to say, those whose property has risen in value and who 
might with propriety be called upon to contribute a larger 
share to the public treasury than others, — and an additional 
burden is placed upon those who have suffered the mis- 
fortune to witness a depreciation of their property, and who 
might with reason ask for special consideration at the hands 
of the tax-assessor and tax-gatherer. John Stuart Mill says 
it is the function of government to do what it can to redress 
the inequalities and injustices of nature ; but in this case we 
see government aggravating these inequahties and injustices. 

THE TAX.A.TION OF PERSONAL PROPERTY IN OHIO. 

We must now turn our attention to the assessment and 
taxation of personal property in the state of Ohio. We find 
in this state in actual practice most of the devices which 
have been recommended by those elsewhere, who are pur- 
suing that will-o'-the-wisp, the fair and equitable taxation of 
all citizens by m^eans of the one uniform direct tax on all 
property. 

Blanks are m.ade out containing lists of every conceivable 
kind of personal property. These blanks are sent to every 
person of the age of twenty-one and over, who must answer 
every question relating to the various sorts of property 
which he owns, or which are in his keeping, and he must 
do this under oath and under pain of heavy penalties. 
These hsts are everything that could be desired, and in 



EXPERIENCE OF OHIO. 153 

inquisitorial nature, go far ahead of anything of the kind 
we have ever seen in the assessment of an income tax. I 
would call attention to the Revised Statutes of the state of 
Ohio, sections 2734 to 2746, inclusive, and in particular to 
sections 2736 and 2737, which read as follows — I will 
quote them to show that they go as far as law well can go 
in respect to inquisitorial examination into private affairs : — 

" Sec. 2736. Each person required to Hst property, shall, 
annually, upon receiving a blank for that purpose from the 
assessor, or within ten days thereafter, make out and deliver 
to the assessor a statement, verified by his oath, of all the 
personal property, moneys, credits, investments in bonds, 
stocks, joint stock companies, annuities or otherwise, in his 
possession or under his control on the day preceding the sec- 
ond Monday of April of that year, which he is required to 
list for taxation, either as owner or holder thereof, or as par- 
ent, husband, guardian, trustee, executor, administrator, re- 
ceiver, accounting officer, partner, agent, factor, or otherwise. 

" Sec. 2737. Such statement shall truly and distinctly set 
forth, first, the number of horses, and the value thereof; 
second, the number of neat cattle, and the value thereof; 
third, the number of mules and asses, and the value thereof ; 
fourth, the number of sheep, and the value thereof ; fifth, the 
number of hogs, and the value thereof; sixth, the number of 
pleasure carriages (of whatever kind), and the value there- 
of; seventh, the total value of all articles of personal prop- 
erty, not included in the preceding or succeeding classes ; 
eighth, the number of watches, and the value thereof; ninth, 
the number of piano-fortes, and the value thereof; tenth, 
the average value of the goods and merchandise which such 
a person is required to Hst as a merchant ; eleventh, the 
value of the property which such a person is required to list 
as a banker, broker, or stock-jobber ; twelfth, the average 



154 TAXATION AS IT IS. 

value of the materials and manufactured articles which such 
person is required to Hst as a manufacturer; thirteenth, 
moneys on hand, or on deposit subject to order ; fourteenth, 
the amount of credits as hereinbefore defined ; fifteenth, the 
amount of all moneys invested in bonds, stocks, joint stock 
companies, annuities or otherwise ; sixteenth, the monthly 
average amount or value, for the time he held or controlled 
the same, within the preceding year, of all moneys, credits, 
or other effects, within that time, invested in, or converted 
into bonds or other securities, of the United States, or of his 
state, not taxed, to the extent he may hold or control such 
bonds or securities on said day preceding the second Mon- 
day of April ; and any indebtedness created in the purchase 
of such bonds or securities shall not be deducted from the 
credits under the fourteenth item of this section ; but the 
person making such statement, may exhibit to the assessor 
the property covered by the first nine items of this section, 
and allow the assessor to fix the value thereof; and in such 
case, the oath of the person making the statement shall be 
in that regard only that he has fully exhibited the property 
covered in said nine items." 

It is also provided that any person required to list prop- 
erty, who shall claim that there is no taxable property within 
his control, which he owms or which he has on account of 
others, shall be required to make oath to that effect. 

It must also be added that these laws are actually en- 
forced. The blanks are, as a matter of fact, distributed, 
they are filled out, and they are returned. 

It is specially required that the personal property shall be 
assessed at its usual seUing price. 

The law affords every facility to the officers intrusted with 
the administration of the tax laws for the ascertainment of 
property. Indeed, it is hard to see how law could go fur- 



EXPERIENCE OF OHIO. 155 

ther. I refer to the Revised Statutes, sections 2781 to 2797, 
inclusive. Parties may be summoned, questioned under 
oath ; and if any person fails to appear, or appearing, refuses 
to testify, "he shall be subject to Hke proceeding and penal- 
ties for contempt as witnesses in actions pending in the Pro- 
bate Court." The costs and expenses must be paid by the 
person whose property is under examination, if he has made 
a false statement to escape the payment of taxes in whole or 
in part ; but if the statement of the person is correct, and no 
intention to evade the payment of taxes shall be evident, 
the costs and expenses must be paid by the county. 

If a person refuse to hst or swear his property to the 
assessor, the auditor shall add fifty per cent, to the amount 
returned or ascertained, and the amount thus increased shall 
be the basis of taxation. 

The powers granted by the laws are ample, as a matter of 
fact ; but the officers intrusted with their administration are 
afraid to be over-diligent in the discharge of duty, knowing 
that in such a case they would not be re-elected. 

Now, what is the result of all this ? I will quote the state- 
ment of the governor in his "Special Message," dated April 
6, 1887, premising only that all inquiries made on the ground 
lead me to suppose that the description of the actual situa- 
tion does not err on the side of pessimism : — 

" Personal property is valued all the way from full value 
down to nothing ; in fact, the great majority of the personal 
property of the state is not returned, but entirely and fraudu- 
lently withheld from taxation. So far as 

Personal Property 

is concerned, the fault is chiefly with the people who list 
their property for taxation. The idea seems largely to pre- 
vail that there is injustice and inequality in taxation, and that 



156 TAXATION AS IT IS. 

there is no harm in cheating the state, although, to do so, a 
false return must be made, and perjury committed. 

" This offence against the state and good morals is too 
frequently committed by men of wealth and reputed high 
character, and of corresponding position in society. 

*' In connection with the recent refunding of our state 
debt, maturing next December, it was disclosed that some 
of the most prominent and highly respected men of our 
state held large amounts of these bonds, without having 
ever paid a dollar of tax on the same, or having in any 
manner reported them for taxation. The only excuse that 
has been suggested for this is, that bonds were supposed to 
be non-taxable ; but it is difficult to be patient with such a 
claim when it is advanced by men of intelligence, familiar 
with our constitution and its requirement, — that all bonds, 
etc., shall be taxed. 

" While such men thus disregard and violate the law, it 
must be expected that our tax duplicate will continue to 
decline, instead of increase, with our growth and develop- 
ment. The harm they do is not measured by the amount 
of money of which they deprive the state ; their example 
is bad, and fraught with evil to the whole community." 

In another part of the same message, the governor refers 
to the existing tax laws, and the constitutional requirements 
respecting taxation, in these words : — 

Our Tax Laws. 

" Our tax laws are, in the main, perhaps as wise as they 
can be made under the present constitution. If it were not 
for its positive injunctions, much might be said in favor of 
exempting from taxation the bonds of our state and munici= 
pal governments, to the end that we might not tax our credit 
and drive our securities away, but keep them at home and 



EXPERIENCE OF OHIO. 157 

pay the interest upon them to our own people. But that is 
impracticable, and unnecessary to be discussed. 

" The requirement of the constitution is that all bonds, 
stocks, investments, etc., as well as real property, shall be 
taxed at their true value in money. Our laws have been 
framed with a view to securing this result, but it is manifest 
to all acquainted with our resources that they have lament- 
ably failed ; for all such know that instead of a grand du- 
plicate of $1,670,079,868, we ought to have one of at least 
three thousand millions, and four thousand millions would 
more nearly represent the taxable wealth of the state." 

The following extract shows a decreased valuation of per- 
sonalty during a period of increasing wealth : "In 1883 the 
value for taxation of the personal property of the state, as 
shown by the grand duplicate, was $542,207,121. In 1884 
it shrunk to $528,298,871, and for 1885 dwindled again to 
$509,913,986. This loss has been made up largely by the 
steady growth of the valuation of real estate, on account of 
new structures, etc., but the loss was greater than the in- 
::rease last year, and the result is shown in the fact that the 
grand aggregate of all property of the state, both real and 
personal, amounted in 1885 to but $1,670,079,868, against 
$1,673,774,081 for 1884, or a loss of $3,694,213. This 
indicates that our wants and our ability to meet them, are 
travelling in opposite directions, and that unless the tax rate 
or the valuation of property is increased, the casual defi- 
ciencies will continue and grow larger without power to pro- 
vide for them, because of the extreme limitation alloAved by 
the constitution having been reached under the bill above 
referred to, providing for the issue and sale of the bonds 
of the state to the amount of $750,000, to meet the emer- 
gency now upon us." 



158 TAXATION AS IT IS. 

These statistics show that the chief trouble is in getting at 
the personal property. 

I conversed with many reliable citizens, who were frank 
with me in their expression of opinion. There* was, natu- 
rally, a wide divergence between their various estimates ; but 
nobody claimed that more than a comparatively small frac- 
tional part of the personal property was reached in the larger 
cities, while it was generally, if not unanimously, held that 
the larger the city the smaller the proportion of personalty 
reached — as, indeed, always happens. One successful busi- 
ness gentleman, well acquainted with different parts of the 
state, estimated the personal property taxed in Columbus at 
from ten to twenty per cent, of the whole, and the amount 
reached in Cincinnati at a considerably smaller percentage. 
On the other hand, I was informed that in Cambridge, 
Ohio, a city of a few thousand inhabitants only, a far larger 
proportion of the personalty was reached. 

I conversed with a gentleman in Columbus, who, from 
practical experience, probably knows as much about taxa- 
tion as any one in the state of Ohio, and was told that 
existing laws signally failed to reach large masses of prop- 
erty ; that the burdens of government rested on the poorer 
and middle classes of society, and that the wealthy escaped. 

A lawyer of standing in Columbus, who holds estates in 
trust for several parties, says that whenever he goes to the 
tax office, to pay taxes, he feels capable of committing rob- 
bery, arson, and murder ; because he is obliged to pay taxes 
on the full value of estates of two, three, and four thousand 
dollars, belonging to little orphan children, whereas he sees 
wealthy clients paying on ten or fifteen per cent, of what he 
knows they are worth. 

After a lengthy conversation with a gentleman who was 
once an official, and had served long in one of the tax de- 



EXPERIENCE OF OHIO. 159 

partments of Ohio, I said, " It seems to me, from what you 
say, there is not a wealthy man in the state of Ohio who is 
not a perjurer." He replied, " It is true." I do not wish to 
make any assertion of the kind ; I simply quote what I 
heard, as an evidence of widespread demoralization. 



CHAPTER V. 

EXPERIENCE OF GEORGIA. 

SO much attention has been given to Ohio because the 
principles embodied in our system of taxation seem to 
be as thoroughly and vigorously carried out there as else- 
where. It is well, however, to examine the experience of 
other states where similar systems of taxation obtain, in order 
that we may the better be able to determine whether the 
failure of the system in Ohio and Maryland is due, on the 
one hand, to certain local peculiarities or to imperfections 
in the details of the law, or in the administration of the law ; 
or whether, on the other hand, the failure of the system 
is due to the nature of the system itself. I accordingly 
decided to visit Georgia, a typical and progressive Southern 
state, and to examine the practical workings of our system 
in that commonwealth. 

The main feature of the tax system in Georgia is the one 
uniform tax on all property, real and personal, and th." reve- 
nue from this tax defrays a greater part of all state and local 
expenses than all other sources of revenue put together. 
There are stringent provisions for the enforcement of the 
law which need not be described at length. All property is 
assessed yearly by tax-payers, and the returns are given to the 
tax-receivers of the various counties. These tax-receivers 
must examine the returns, and receive them only when appar- 
ently satisfactory ; all returns are made by filling out blanks 
containing minute specifications designed, on the one hand, 
to aid the tax-payer in making a full return of all his prop- 



EXPERIENCE OF GEORGIA. 161 

erty; on the other, to make concealment difficult. The 
statute provides the questions which must be asked in the 
blank, and there are thirty-six distinct questions, many of 
them containing several sub-questions, if the expression may 
be used. The following, for example, is regarded as one 
question : " How many acres of land, except wild lands, do 
you own, or of how many are you the holder, either as par- 
ent, husband, trustee, executor, administrator, or agent; 
where is the same located by number, district, and section ; 
what is the value thereof? " 

The following are a few other questions which are asked : — 

^' How many shares in the bank of which you are presi- 
dent, and what is the value thereof? " 

" How much capital have you in the bank of which you 
are president, and what is the value thereof? " 

" How much capital have you in the bank of which you 
are president, as a sinking fund, or surplus fund, and not 
represented in the value of the shares?" 

" How much property, real and personal, does the bank 
of which you are president, own, not used in the banking 
business, and what is the value thereof? " 

''The value of merchandise of all kinds on hand? " 

" How much capital invested in bonds, except bonds of 
the United States, and such bonds of this state as are by law 
exempt from taxation?" 

" What is the value of your kitchen furniture ? " 

"The value of your gold watches?" 

" The value of your silver watches ? " 

Finally, after many more questions, which would seem to 
include everything, this question is asked : — 

" The value of all other personal property not herein men- 
tioned?" 

The statute also describes personal property, and these 



162 TAXATION- AS IT IS. 

are the words used : " Be it further enacted, That personal 
property shall be construed, for purposes of taxation, to in- 
clude all goods, chattels, moneys, credits and effects, what- 
soever they may be ; all ships, boats, and vessels belonging 
to the inhabitants of this state, whether at home or abroad, 
and all capital invested therein; all money .within or without 
the state, due the person to be taxed ; all stocks and secu- 
rities, whether in corporations within this state, or in other 
states, owned by citizens of this state, unless exempt by the 
laws of the United States, or of this state." 

The oath which is attached to the lists to be filled out by 
the tax-payers is prescribed, and is as follows : " I do sol- 
emnly swear that I have carefully read (or have heard read), 
and have duly considered the questions propounded in the 
foregoing tax-list, and that the value placed by me on the 
property returned, as. shown by said list, is at the true market 
value thereof; and I further swear that I returned, for the 
purpose of being taxed thereon, every species of property 
thai I own in my own right, or have control of, either as 
agent, executor, administrator, or otherwise ; and that, in 
making said return for the purpose of being taxed thereon, 
I have not attempted, either by transferring my property, or 
by any other means sought to evade the laws governing tax- 
ation in this state. I do further swear that in making said 
return, I have done so by estimating the true worth and 
value of every species of property contained therein." 

This oath must be subscribed by the persons making the 
return, and the administration and taking of the oath must 
be attested by the receiver of tax returns. 

An act was passed in 1874, entitled an act to provide for 
the correct assessment of taxable property in this state, 
which is worthy of notice, and in its aim to secure the co- 
operation of representative citizens with tax officials, it is 



EXPERIENCE OF GEORGIA. 163 

undoubtedly a move in the right direction, whether or not 
this may be precisely the right method of obtaining the 
desired end. It is provided in this act that the tax-receiver 
in each county must, at the fall term of the Superior Court 
in his county, lay his returns for that year before the grand 
jury, whose duty it is then to examine the same, and to 
assess at its true value all property which they may find 
undervalued. This corrected digest is the tax-receiver's 
guide for the succeeding year, and whenever any person 
returns his property at a valuation lower than that of the 
digest, its true value is ascertained by arbitration in this 
wise : The tax-payer appoints an arbitrator, the tax-receiver 
likewise appoints an arbitrator, and these two elect an um- 
pire ; to these the question of valuation is referred, and the 
decision of these three is final. 

The system of taxation for the state of Georgia is placed 
under the supervision of the Comptroller-General, who is- 
sues " Instructions " to the tax-receivers, those officials con- 
cerned with assessment, and also to the tax-collectors of the 
state, informing them of the nature of their duties, describ- 
ing the precise method of procedure on their part, in the 
fulfilment of their several duties, and pointing out to them 
pitfalls for the unwary or inexperienced. I have read these 
"Instructions" issued for the year 1886, by Hon. W. C. 
Wright, Comptroller-General, and can testify that they give 
evidence of the fact that they were prepared by an alert, 
experienced, and capable public officer, conscientious to the 
state in the discharge of the functions of his office. It 
would seem that the plan pursued in Georgia of placing the 
entire system of state and county taxation under the general 
supervision of one man, and making him responsible for the 
administration, has in it much that is worthy of commenda- 
tion. 



164 TAXATION AS IT IS. 

But does Georgia succeed better than Ohio in reaching 
all property? I doubt it. 

The Comptroller- General, in his " Instructions " for the 
year of 1886, repeatedly has occasion to point out the fact 
that a large portion of property either entirely escapes tax- 
ation or is not assessed at its true value. I will quote a few 
sentences taken from different parts of these " Instructions " : 
" Our lands are worth a great deal more than the same are 
being returned for taxation, and you cannot be too careful 
in the discharge of the duties imposed upon you in receiv- 
ing their returns." 

"crry and town property. 

"There is very just complaint against the custom or 
practice of tax-payers returning this class of property to 
the receiver of tax returns, for the state and county, at a 
very much lower valuation than the same property is re- 
turned to the corporate authorities for taxation. It must be 
manifest to every one that property is worth as much when 
returned for taxation by the state or county as when returned 
to be taxed by the cities. Look closely to the returns of 
this species of property, and endeavor to correct the evil 
complained of." 

"notes, accounts, bonds, merchandise. 

" From a careful examination of the digest of file, in this 
office, it is evident to me that such property is not returned 
as it should be, and, as an officer whose duty it is to see that 
all property is returned, I ask of you to give this your care- 
ful attention." " All notes, accounts, and other evidences of 
debt are taxable, and, like other property, at their market 
value. It is sometimes the case that persons owning this 
class of property deed or convey it to citizens of other 



EXPERIENCE OF GEORGIA. 165 

States or remove same, in order to avoid paying taxes due 
on it. Such deeds and conveyances are illegal and void 
(see Code, section 813 . . .), and the property so deeded 
or conveyed must be returned for taxation." 

" h. great many merchants and other citizens of this state 
have borrowed money on bonds, notes, and other evidences 
of debt owned by them, and have deposited such bonds, 
notes, etc., as collateral security w4th the persons from whom 
they have made such a loan, and think that said notes, 
bonds, etc., being out of their hands on April ist, such prop- 
erty should not be returned by them ; this is not true." 

" I desire to invite your attention especially to the returns 
of merchandise. An examination of the returns of this item 
of property in the state discloses the fact that at least fifty 
per cent, of this class of property is not returned for taxation 
ai all. I am quite sure that a very large percentage of the 
watches, jewelry, pianos, organs, etc., owned in our state 
are not returned at anything like their market value." 

The Comptroller-General, in conclusion, again takes oc- 
casion to remind the receivers of tax returns, that it is 
contrary to " law to allow any one to make a return of his 
property, without administering the oath and propounding 
the questions instructed from this office." 

I visited Savannah, Atlanta, and Augusta, and conversed 
with public officers as well as with many citizens of charac- 
ter and standing in their respective communities, and the 
unanimous testimony of all who had given this subject any 
careful attention, more than confirmed the quotations from 
the Comptroller-General in regard to the inadequate nature 
of the returns of tax-payers. 

I conversed with a gentleman in Savannah, who is prob- 
ably as well acquainted with the actual workings of the tax 
laws there in force as any resident of the city, and he told 



166 TAXATION AS IT IS. 

me that they could not reach the personal property ; that 
millions of dollars escaped. " A person has bonds and does 
not return them; but what are you going to do about it?" 
asked this gentleman. " If he does not return them, must 
he not take a false oath and perjure himself? " I replied. 
"Yes," answered he ; " and it is unfortunately a thing which 
is done every day." 

I was told that people with elegantly furnished houses 
frequently valued their furniture at ^500 or ^600, although 
if the furniture were put up at auction, that in each room 
would bring as much. But I was again asked : " What are 
you going to do about it ? We cannot well go into people's 
houses and examine their furniture. A gentleman has been 
appointed by the City Council who puts up the valuation of 
personal property, if there seems to be a reason for it, and 
;^ 1,000,000 has this year been added to the assessed valua- 
tion of personalty ; but after all, the burden of proof rests 
on the city. We cannot raise the valuation without a reason 
therefor." 

Another gentleman, with almost equal facilities for care- 
ful observation, told me that no one paid any attention to 
the personal property tax. "There is, for example," said 
he, " a tax on watches, but there are not ten men in Savan- 
nah who own watches." This last was naturally said laugh- 
ingly.i 

The valuation of property in Savannah is acknowledged 
to be low because the valuation for municipal purposes is 
taken as a basis for state and county taxation, and the resi- 
dents say that if the assessed valuation is raised, they will 

1 Through the kindness of Robert P. Dechert, Esq., City Comptrol- 
ler of Philadelphia, I am enabled to give striking illustration of the 
futility of the attempt to tax everything. There is a state tax of one 
dollar on each gold watch, of seventy-five cents on each silver watch, 



EXPERIENCE OF GEORGIA. 



167 



bear more than their fair share of the burdens of county 
and state, because property elsewhere is not assessed at its 
full value. 

Savannah is situated in Chatham County, and one of the 
gentlemen connected with the administration of the tax laws 
for that county and for the state, told me that about 1873 
the assessed valuation of property in Savannah was some 
twenty-six millions of dollars, and that the rate of taxation 
in the city was one per cent., but that to escape paying so 
much to the county and to the state, they reduced their 
assessed valuation to the neighborhood of twelve millions 
and raised their local rate to three per cent. 

One feature of taxation in Savannah is unique for an 
American city, and deserves notice. It has long been the 
practice in Savannah to tax personal property and real 
estate at two different rates. The tax ordinance for 1887 
fixes the rate of taxation on real estate at two and one- 
eighth per cent, of value, and on personal property at one- 
half of one per cent. Shares in banks and banking associa- 
tions alone are excepted. The rate of taxation on shares 
in banks doing business in Savannah is fixed by state law at 
three-tenths of one per cent., whether the owner of such 
shares resides in the city or elsewhere. I was told by the 

and fifty cents on every other watch carried in Philadelphia. The fol- 
lowing table shows the number of watches of each description taxed 
in that city of nearly a million of inhabitants, in the years 1883, 1884, 
i88<;: — 





1883 


1884 


1885 


Gold watches 

Silver watches 

Other watches 


14,515 

375 

19 


18,509 

675 

74 


18,390 

545 

55 



168 



TAXATION AS IT IS. 



head of the tax department, Major Hardee, that in his 
opinion the lower rate of taxation produced as large a 
revenue as a higher rate would. It is not claimed, how- 
ever, that the results are entirely satisfactory, for, as has 
already been mentioned, large amounts of personal prop- 
erty escape. The assessed valuation for 1886 as it appears 
on the city treasurer's books was as follows : — 







MUNICIPAL 

TAX RATE. 

PERCENTAGE. 


AMOUNT OF TAX. 


Real estate . . . 
Stock in trade . . 
Personal .... 
Banking capital . . 
Shipping . . . . 


$13,343,632 
2,341,046 

3,521,525 
1,898,891 

1,346,350 


2i 
\ 
\ 

\ 


$283,552 18 

11,705 23 

17,607 63 

5,696 67 

6,731 75 


Total 


$22,451,444 




$325,293 46 



It is simply impossible to tell what ought to be the exact 
proportion between real and personal property ; but as it is 
a fact beyond controversy that large amounts of personal 
property escape taxation, it is" manifest that it ought to be 
different from what it actually is in Savannah. No one, so 
far as I know, who has ever looked into the matter, claims 
that the amount of personal property in a modern city is 
less in value than the real estate ; and if we assume that they 
are equal in Savannah we can see how far the Savannah 
system fails of reaching all personal property. 

All the time I was in Georgia I saw no one who claimed 
that property in any part of the state was assessed at its 



EXPERIENCE OF GEORGIA. 169 

true value, though I understand that the assessments on 
some property in Atlanta were high ; yet every one takes) 
an oath to return property at its true value ! 

Again I remark that nothing is further from my thoughts 
than to make an attack on the people of any state, for I 
simply wish to show the natural consequences of our 
existing methods of assessing and taxing property. 

It is not necessary to add further testimony from Atlanta 
and Augusta, as it would be scarcely more than a repetition 
of what has already been said. 



CHAPTER VI. 

EXPERIENCE OF WISCONSIN AND WEST VIRGINIA. 

I. WISCONSIN. 

Taxation of Railroads. 

I WENT to Wisconsin to ascertain the experience of a 
new and progressive state in the Northwest, in respect 
to taxation. A great part of the revenue of this state is 
derived from a Hcense tax on steam railroads, and it was 
proposed to raise all the revenues for state purposes from 
this tax in the near future. This method of taxing railroads 
yielded large returns, and seemed to give very general 
satisfaction. My attention was frequently called to it, and 
it was especially commended. 

The license fees in Wisconsin are as follows : — 

" I. Four per centum of the gross earnings of all rail- 
roads except those operated on pile and pontoon, or pon- 
toon bridges, whose gross earnings equal or exceed three 
thousand dollars per mile per annum of operated railroad. 

" 2. Five dollars per mile of operated railroad of all 
railroads whose gross earnings exceed one thousand five 
hundred dollars per mile per annum, and are less than 
three thousand dollars per mile per annum of operated road, 
and in addition two per centum of their gross earnings in 
excess of fifteen hundred dollars per mile per annum. 

" 3. Five dollars per mile of operated road by all com- 
panies whose gross earnings are less than fifteen hundred 
dollars per mile per annum. 



EXPERIENCE OF WISCONSIN. 171 

" 4. Two per centum of the gross earnings of all railroads 
which are operated upon pile or pontoon bridges, which 
gross earnings shall be returned as to such parts thereof as 
are within the state. 

" One-half of such license fee shall be paid at the time 
the license so issues, and one-half on or before the tenth 
day of August in each year." 

The railroads resisted the tax at first, as corporations al- 
ways do new taxes, until they perceived that it was impossi- 
ble to escape its payment, and since that time they have given 
little trouble. The license fee is regarded as a payment for 
a privilege, and perhaps may more properly be so regarded 
than as a real tax, for a regular tax would not necessarily 
be excluded hereby. In Baltimore, Maryland, for example, 
license fees are paid, and regular taxes in addition, by street- 
car lines. The advantages of deriving a large revenue in 
this way are obvious. Railroad corporations are too power- 
ful for local political units to handle, and for these to 
attempt to tax them leads to friction and corruption. States 
are really not powerful enough, but they are more nearly 
equal to the great railroad corporations in strength, and it 
is in every way desirable to turn all vast corporations, whose 
operations extend throughout the state, over to the state 
exclusively for taxation. Insurance companies and telegraph 
companies, are also, in Wisconsin, taxed by the state ; but 
inadequate revenue is derived from telegraphs and tele- 
phones, and attention has been called to the propriety of 
bringing sleeping-car companies, operating in Wisconsin, 
under the general rule, and placing a license tax on them. 

Since 1883 these special sources have been so productive 
that there has been no state tax for general purposes. A 
tax of one mill on the dollar, or ten cents on the hundred 



172 TAXATION AS IT IS. 

dollars, is levied for school purposes, and a tax of one cent 
on the hundred dollars for the state university. 

The railroad companies' license fees for 1885 and 1886 
yielded $1,481,066.56 out of total receipts for the state of 
J^2, 963, 538. 88, or about fifty per cent, of all revenues. 

T/ie General Property Tax. 

The oldest source of revenue, and until the present time 
an important one for the state, and still the chief one for all 
local purposes, is the one uniform tax on all property, real 
and personal. There is nothing especially noteworthy to be 
said about the experience of Wisconsin with this tax, as it is 
similar to that of Ohio and Georgia, although the adminis- 
tration of the laws does not appear to be nearly so strict, and 
the blanks with minute specifications are not required to be 
filled in by each tax-payer under oath. 

Personal property, it was generally said — indeed, I remem- 
ber no contradiction of the statement — was not reached; 
especially not in large places, and still more especially not in 
the case of men of large means. I was told that in a small 
city like Ripon, most of the personal property was reached, 
in Madison less, and in Milwaukee still less. This is in keep- 
ing with what I found everywhere. The great cities escape 
the personal property tax to a more considerable extent than 
the smaller cities and villages, and still more than the rural 
districts. 

A gentleman of prominence, in a city in Wisconsin, which 
I will not name, and an office-holder under the present fed- 
eral administration, said to me : " You see in me a monu- 
ment of the iniquity of our present system of taxation. When 
I was a poor and struggHng young man, with five or six 
hundred dollars' worth of personalty, I paid on all that I 
had ; but now that I really have something, I keep still and 



EXPERIENCE OF WEST VIRGINIA. 173 

pay taxes only on part of my property. Indeed, when I 
think about taxation in our states and cities, I feel Hke turn- 
ing anarchist and blowing things up with dynamite." 

II. WEST VIRGINIA. 

I will quote a few passages from the " Preliminary Re- 
port of the West Virginia Tax Commission," made in 1884, 
which have a bearing on the points under discussion, and 
which confirm the results of my own obsers^ations. 

Those Evading Taxes are Generally Best Able to Pay them. 

" For the purpose of suggestion, and by way of illustration, 
tax-payers may be divided into two classes. One class con- 
stantly schemes to shift off on a neighbor some burden which 
they themselves ought to carry ; the other class, unskilled in 
the practices of evasion, submit to whatever is measured out 
to them by the recognized authorities, and pay whatever is 
demanded. The one class is shrewd, enterprising, and adroit ; 
the other is content to accumulate property slowly, honestly, 
and by hard labor. It is the very first duty of a government 
so to shape its tax laws that this second class wijl be fairly 
dealt with; it is largely composed of those helpless and 
unobtrusive persons, who, treading the humbler walks of life, 
make but little noise in the world, and are seldom able to 
assert or defend their personal rights. Again, the first class, 
by reason of their activity and shrewdness, have m.ore abil- 
ity than the other class to carry their full proportion of a 
common burden. ... It is a primary principle that the 
subjects of a state ought to contribute towards the support 
of the government, as nearly as possibfe in proportion to 
their respective abilities ; but it will be seen before these 
reports are concluded, that in West Virginia almost the re- 



174 TAXATION AS IT IS. 

verse is the case, and that a man of small means pays, as a 
rule, more in proportion than a m.an of large means. 

" The statistics bearing on this point will scarcely be cred- 
ited by persons who have not investigated the subject, and 
they exhibit a condition of things that ought not to be tol- 
erated. It will be found, for instance, that a house and lot 
worth $800 is valued at $700, while a house and lot v/orth 
j^'Sooo is valued at ^4000 — in the one case at seven-eighths, 
and in the other at one-half; that is to say, the owner of the 
small property has ^100 untaxed, and the owner of the large 
property has forty times that amount untaxed. Again, when 
a person dies, his entire personal estate is listed and valued 
by the appraisers, whose appraisement is recorded by the 
county clerk. By comparing a number of these appraise- 
ments with the tax assessments made next prior to the death 
of such person, we find that a man with a personal estate 
valued immediately after his death at $200, was rated imme- 
diately before his death at I178 ; while a man whose estate 
is appraised at $5000 was rated at only $1500; that is to 
say, if the man of small means was rated in the same pro- 
portion as the man of larger means, he would pay taxes on 
only ^60, whereas he now pays on ^178. 

"At present all the taxes from invisible property come 
from a few conspicuously conscientious citizens, from widows, 
executors, and from guardians of the insane and infants ; in 
fact, it is a comparatively rare thing to find a shrewd trader 
who ' gives in ' any considerable amount of notes, stocks, or 
money ; the truth is, things have come to such a condition 
in West Virginia that, as regards paying taxes on this class 
of property, it is almost as voluntary and is considered pretty 
much in the sam^ light as donations to the neighborhood 
church or Sunday-school. 

"A merchant's stock of goods was worth ^15,000; he 



EXPERIENCE OF WEST VIRGINIA. 175 

'gave it in' to the assessor at ^2500, and this conversation 
occurred : — 

" Assessor. ' I can't take this valuation ; the law requires 
me to swear you.' 

" Merchajit. ' If you swear me, I'll vote against vou next 
time.' 

" Mr. A. paid $800 for his piano, and Hsted it as worth 
;^ioo. Mrs. S. paid $250, and listed hers at $250. 

" It is useless to continue these examples ; they are only 
too familiar to every citizen. It is idle to expect a man to 
meet the assessor in a proper spirit, when he feels that he is 
subjected to the alternative of either telling a falsehood or 
being swindled. If I am compelled to pay a tax which be- 
longs to my neighbor, I am swindled, and I feel the injustice 
as much as if robbed on the pubhc highway. 

" Under the present system (probably) four-fifths of the 
invisible property is not listed, and of the visible property 
that is on the assessor's books (probably) one-half is as- 
sessed at forty per cent, lower than the other half. 

"We frequently hear the remark : ' If a man is ten times 
richer than I, he ought to pay ten times as much tax ; 
whereas, the richer a man is, the less is his tax in propor- 
tion to his property.' " 



CHAPTER VII. 

EXPERIENCE OF NEW YORK. 

IET us turn to New York state, where full returns are 
_^ easily accessible. For many years attention has been 
called, by commissions and administrative officers, to the 
defective assessment of personal property in that common- 
wealth ; but what have been the results of their admonitions ? 
While no one doubts that personal property in that state has 
been increasing steadily, and with great rapidity, there has 
been a constant decline in the proportion of public burdens 
borne by personalty. '-In 1869 ^^^^ estate contributed 
sevent}^-eight per cent, of the pubUc revenue, and personal 
property paid tvventy-tw^o per cent. ; while in 1879 real estate 
was made to pay eighty-seven and eight-tenths per cent., and 
personal property only twelve and two-tenths per cent, of the 
whole tax. It would be difficult to show that the value cf 
personal property has not increased to a larger extent in the 
past ten years than real estate." ^ 

This decrease in the assessed valuation of personalty has 
continued from 1878 to 1880; the decrease in round num- 
bers was thirty millions of dollars ; from 1880 to 1881, there 
was an increase of twenty-nine miUions, which was, however, 
more than counterbalanced by a decreased valuation of 
nearly thirty-six millions in 1882. 

The New York assessors say in their report for 1881, that 

1 Governor's Message, 1881. 



EXPERIENCE OF NE W YORK. Yll 

" banking capital ^ is assessed fully eighty-live per cent, of its 
nominal value, while it is quite evident that other personal 
property is assessed at an average of less than ten per cent." 
And in another place they use these words : " As it is an 
acknowledged fact that the assessable personal property in 
the state equals, if it does not exceed, the real value of the 
real estate, demanding a large share of the attention of the 
legislature and courts for its protection, and yielding quite as 
much profit to the owner as real estate, it should be made to 
bear more of the burdens of taxation. 

"who pays taxes on personal? 

" The answer to this question is to be found in the assess- 
ment rolls of the cities and towns, and is disgraceful to the 
commonwealth. Women, heirs, executors, administrators, 
guardians, and trustees of persons of unsound mind are 
assessed beyond all measure of justice. 

" A man dies, leaving in personal property an amount, the 
interest of which is barely sufficient with rigid economy to 
support the widow. The records of the surrogate or the 
publication of loss by a hfe insurance company, reveals the 
fact, and the assessor, bound by his oath to be ' diligent ' in 
his inquiry for personal property, enters the full amount on 
his roll ; and if in a city, the tax of from two to four per 
cent, must be paid from the amount already too small to pro- 
vide the necessities of life. 

"This same assessor, however, if not forgetting his oath 
when inquiring of the wealthy neighbor as to his personal, 
very likely accepts the negative answer as truthful, though 

1 They must refer only to incorporated banks. One of the worst 
features of taxation in New York is the evasion of taxation by private 
bankers. 



178 TAXATION AS IT IS. 

it is well known to the community that he possesses large 
means. 

" The one has not yet learned how to cover the personal 
property by an assumed indebtedness, while the other is well 
versed in the many devices by which he may escape even 
the ' diligent ' assessor. 

"This is no fancy picture. Many cases of hardship in 
assessing personal property have come to our notice. Here 
is one : A man in comfortable circumstances, with a business 
giving him a good support, becomes insane. His business is 
placed in the charge of a trustee, who converts his effects 
into money. Awaiting a better opportunity for investment, 
the amount is deposited in a savings bank at four per cent, 
interest, the only means of support for the wife and family. 

"The assessors placed the full amount thus deposited on 
the assessment roll, and yet they could truthfully say that 
they had not violated the law in so doing. 

" The common practice of many is to create an indebted- 
ness to bridge over the ist of July, after which the assessor 
cannot reach the party for personal assessment. 

" It must, however, be patent to every one that has given 
any attention to this matter of the assessment of personal 
property, that the present practice is a farce, and should no 
longer be tolerated." 

Governor Hill refers as follows to the subject of taxation, 
in his annual message for 1886 : — 

" It is believed that the tax laws of the state need a 
thorough revision. The present system of taxation has ex- 
isted for years with few changes, and comparatively little 
improvement. Every radical modification seems to have 
been stoutly resisted irrespective of its merits and propriety. 

" It is evident that the personal property of the state does 
not pay its just proportion of taxes, and the disparity in the 



EXPERIENCE OF NEW YORK. 179 

assessed valuation of personal and real property verifies the 
statement that the statutes governing the appraisement and 
assessment of personal property are to a great extent defect- 
ive and do not reach the great bulk of personalty for the 
purposes of taxation. 

"For years the state assessors have directed public 
attention to the fact that the personalty of the tax- payers 
was escaping assessment, yet there has been a shrinkage 
from 1871 to 1884 (not inclusive) of ^107,184,371. 

" The loss has been upon the assessment rolls alone, for 
the personal property of the citizens of the state has 
greatly augmented during the same period. The wealth 
of the state has increased with its population and re- 
sources, and if the personal property does not show an 
increase upon the assessment rolls, it may be accounted 
for in part by a lax administration of existing laws, but it 
mainly may be attributed to the defects in the laws them- 
selves. 

" That such laws are inoperative to reach personal estate 
is evident by the mere statement of the fact that while — 
according to the last report of the state assessors — the 
assessed valuation of the real estate of the state is $2,669,- 
173,011, the valuation of the personal estate is only 
$345,418,361, or about one-eighth of the realty. 

" It is reasonable to believe that if our present tax laws 
were reformed and placed upon some true and consistent 
theory, the assessment of the personalty would nearly equal 
the assessment of the realty, and thereby the present unjust 
burdens upon real estate would be greatly alleviated." 

The state assessors in their report for 1886 substantiate 
the foregoing with these remarks : — 

" The condition of the present assessment of the real and 
personal property of the state is correctly indicated by the 



180 TAXA TION AS IT IS. 

comparison we have instituted with former years. The 
comparison points to the remarkable fact that there has 
been an average yearly increase in the aggregate valuation 
of the realty for the purpose of taxation, and, with an 
occasional exception, a yearly decrease in the aggregate of 
the personal. 

" The assessed valuation of real estate in 1 875 was . ^1,960,352,703 
The assessed valuation in 1885 was 2,762,348,218 

Increase in ten years ^801,995,515 

The assessed valuation of personal property in 1875 

was ^407,427,339 

Assessed valuation in 1 885 was ....... 332,383,239 

Decrease in ten years $75,044,160 

The assessed valuation of real estate in 1884 was . $2,669,173,011 
Assessed value in 1885 was 2,762,348,218 

Increase in 1885 $92,175,207 

The assessed valuation of personal property in 1884 

was $345,418,361 

Assessed value in 1885 was 332,383,239 

Decrease in 1885 $13,035,122 

Aggregate increase of real and personal in 1885 . $79,140,085 

"Aggregate Tax paid dy the Real a?id Personal, respectively, 
in i8ys ^^^^ i88§, and the Rate Per Cent, paid by the 
Real and Personal in Said Years. 

"The amount of state tax levied for all purposes in 1875 
was $14,206,680.11. 

" The rate of state tax for the above year was six mills on 
each dollar of valuation. ■• 

" The aggregate sum of said tax paid by the realty in said 
year was $11,762,116. 



EXPERIENCE OF NEW YORK. 181 

" Paid by the personal, $2,444,564.61. 

"The amount of state tax levied for all purposes in 1884 
was 1^7,762, 572. 78. 

" The rate of state tax on each dollar of valuation was 
2|-| mills. 

" The aggregate sum of said tax paid by the realty in said 
year was $6,873,120.50. 

'' Paid by the personal, $889,452.28. 

" Rate per cent, paid by real estate in 1875 ^^^ ^2^^. 

" Rate per cent, paid in 1885 was SS^^^q-. 

" Rate per cent, paid by the personal in 1875 was i7iV(r* 

" Rate per cent, paid in 1884 was ii^^V- 

" If the above statement had included the year 187 1, when 
the assessed valuation of the personal aggregated $452,- 
607,732 (the largest amount that has been spread upon our 
assessment rolls), it would appear that the personal paid 
over twenty per cent, of the total state tax in said year. 
Now it is generally conceded that the personal property 
has proportionately increased with the real, and that it is 
not sustaining its just proportion of taxation. We therefore 
suggest remedial legislation. 

" Estimated Aggregates of the Personal Property owned in the 
State Liable to Assessme?tt and Taxation. 

Capital surplus and undivided profits of the National 

banks ^116,458,000 

Capital surplus and undivided profits of state bonds . 34,443,289 

Capital invested in manufacturing, 1880, as per census, 514,246,575 
Value of live stock and farming implements (census of 

1880) 160,461,024 

Capital in mercantile interests, estimated 750,000,000 

Capital invested in bonds and mortgages, estimated . . 500,000,000 
Capital invested in jewelry, paintings, statuary, house- 
hold furniture, etc., not exempt 10,000,000 

^2,085,680,888 



182 TAXATION AS IF IS. 

" It is a reasonable assumption that the above amount 
represents a fractional part of the personal of our tax- 
payers, and that the total sum liable to assessment and 
taxation fully equals the aggregate assessment of the real 
estate of 1884. At all events, the above estimates substan- 
tially indicate that the personal sustains but a small per- 
centage of the burdens of government, and that the laws 
relating to the assessment thereof are loosely executed or 
defective. 

" State?nent of the Assessed Valuation of Personal Property 
in Other States. 

"In 1880 the assessed valuation of personal property in 
the state of Massachusetts was ^473,596,730, aggregating 
^151,128,018 more than the valuation of the personal in the 
state of New York in that year. 

" In the above-named year, the assessment of said prop- 
erty in the state of Ohio was $440,682,803, aggregating 
i^ 1 1 8, 2 1 4,09 1 more than the assessment of the personal in 
New York in said year. 

" In Ohio, the personal paid about 42 per cent, of the 
state tax. In Massachusetts, it paid about 42y\^-g- per cent. 
In Indiana, with a personal valuation of $189,131,892, it 
paid about 35 per cent. In Illinois, with a personal valua- 
tion of $211,175,341, it paid about 37 per cent., while the 
Empire State, embracing the city of New York, wherein 
is concentrated and owned a large share of the wealth of 
the nation, the personal paid in the aforesaid year of 1880, 
about 14 per cent, of the state tax, and in the year 1884, 

only iiyVo ^^ ^^^^ ^^^• 

'' Bearing on the question of personal taxation, the New 
York Times of July 7, 1885, says: 'There is scarcely a 
doubt that the wealth held in this city in the forms classed 



EXPERIENCE OF NEW YORK. 183 

as personal property greatly exceeds that held in real es- 
tate . . . There is no doubt that twenty-five men in this 
city could be named, whose wealth in personal property 
alone exceeds the entire valuation of that class of property 
as shown on the assessment rolls.' 

"Now, if the above statement is correct, viz., that the 
personal property held in New York City greatly exceeds 
that held in real estate, the following statement of the as- 
sessed valuation of the real and personal in that city, in 
1884, suggests that a mere trifle of the personal property of 
its citizens is spread upon its assessment rolls, for the pur- 
pose of state or local taxation. Assessed valuation of the 
real estate in New York City in 1884, was ^1,119,761,597. 
Assessed valuation of personal property in 1884, was $181,- 
504,533. The New York Tribime of July 18, 1885, says: 
' . . . The wealth of New York City is exceeded by the 
valuations of only four states in the Union — New York, 
Massachusetts, Ohio, and Pennsylvania.' 

^^ Statement showing the Amount of State Taxes paid by 
the Real and Pej-sonal of the Several Counties in 1884, 
that embrace the Principal Cities of the State. 

"The county and city of New York paid state tax as 
aforesaid, as follows : — 

On its assessed valuation of real, ^3,072,104.54. 
On its assessed valuation of personal, ^508,681.22. 
The real estate paid of said tax, '^Z^-^-^ per cent. 
The personal paid, i6j%^o per cent. 

" The county of Kings, including the city of Brooklyn, 
paid state tax as follows : — 

On real estate, ^731,031.45. 

On personal property, ^34,392.69. 



184 TAXATION AS IT IS. 

The personal paid of said tax, /H^ywo V^^ '^^^t. 
The real paid, 95xVo P^^ cent. 

" The county of Monroe, including the city of Rochester, 
paid said tax as foUoAvs : — 

The real estate paid, $165,232.95. 
The personal paid, $8,791.35, 
The real paid of said tax, 94xVo P^'^ cent. 
The personal paid, 5y%2_ per cent. 

" The county of Albany, including the city of Albany, paid 
state tax as follows : — 

On its assessed realty, $183,529.64. 
On its assessed personal, $19,463.45. 
The real paid of said tax, 893-^0 P^'^ cent. 
The personal paid, 10^-^-^ per cent. 

" Erie County, including the city of Buffalo, paid- state tax 
as follows : — 

On assessed realty, $228,750.43. 
On assessed personal, $27,521.78. 
The real paid of said tax, 87^^'^ per cent. 
The personal paid, I2j-|q per cent." 

It is not then surprising that the Hon. Alfred C. Chapin, 
late Comptroller of New York State and present Mayor of 
Brooklyn, advocates a new system of taxation, and speaks of 
the present system as " the antiquated system now prevail- 
ing." 

BOARDS OF EQUALIZATION IN NEW YORK STATE. 

One of the strange products of our astonishing financial 
methods is the board of equalization, which has reached its 
highest development in New York, and illustrates the para- 
doxical remark already made, that the more you improve 
our present system of taxation, the worse it becomes. 



EXPERIENCE OF NEW YORK. 185 

The tendency to undervaluation is an inherent part of 
present methods. Preceding chapters have made this suf- 
ficiently obvious. Real estate must be assessed by men of 
local knowledge, but men of local knowledge are interested 
in their own locality and are elected to represent its interests. 
The largest assessment district which is practicable is the 
county, and it is possible to assess property uniformly within 
a county. In New York state, however, assessment is made 
by township assessors, and the lower the assessment, the 
lower the tax. Each township board tries to outdo the 
others in under-assessing property, although sworn to return 
it all at its true selling value. To correct this, the county 
board of supervisors, consisting of one supervisor from each 
town, constitutes a county board of equalization with power 
to raise or lower the assessed valuation of real estate only, in 
any township, provided it does not alter the grand total. 

What is taken from one town must, then, be added to 
another. This is an arbitrary proceeding and can at best be 
based on guess-work. It is said, however, that this power is 
used for political purposes; that a board of supervisors of 
one party has been known to punish a town for giving a 
majority for the opposite party, by adding a round sum to 
the assessed valuation of its real estate, which would natu- 
rally be taken from towns in favor with the dominant party. 
After the county board of equalization has arranged the rela 
tive valuations of the different townships satisfactorily, a state 
board of equalization equalizes the county valuations of real 
estate in a similar manner, taking something off from the 
valuations of some of the counties and adding it to the valu- 
ations of other counties, but leaving the aggregate valuation 
throughout the state unchanged. The opportunities for a 
misuse of power are equally great, and the proceedings must 
be of quite as arbitrary a character. Complaints are perpet- 



186 TAXATION AS IT IS. 

ually heard on account of the equalizations of the state board, 
and a good deal of antagonism between various parts of the 
state, especially between New York City and the rest of the 
state, is produced. It is said that the political influence of 
the farmers induces the board of equalization to raise the 
valuation of New York City unduly ; but, on the other hand, 
the farmers know that a large proportion of the vast wealth 
of New York City escapes taxation, and they feel that the 
city does not bear an adequate proportion of the public bur- 
dens. The state taxes are apportioned among the counties, 
and the county taxes, including the apportioned amount of 
state taxes, are apportioned among the towns. The town 
authorities add state and county taxes to the appropriations 
for town expenses, and raise the whole on the basis of an 
assessment of the town assessors. The individual assess- 
ments are not changed by the county and state boards, but 
the tax rate for county and state purposes must depend on 
the apportionment. Town authorities send the amount due 
to the county authorities, and the county authorities forward 
to state authorities the amounts assigned to their respective 
counties. 

The state board of equalization, organized in 1859, consists 
of the lieutenant-governor, the secretary of state, the attor- 
ney-general, the state treasurer, the state engineer and sur- 
veyor, the speaker of the Assembly, and three traveling state 
assessors. The traveling assessors must visit every county 
in the state at least once in two years and " prepare a written 
digest of such facts as they may deem most important for 
aiding the board of equalization in the discharge of its 
duties." The state assessors do all the work, and really 
constitute the board of equahzation. The other members 
are a useless appendage, and the assessors have recommended 



EXPERIENCE OF NEW YORK. 187 

that the board of equalization be reconstructed by the addi- 
tion of two assessors and by the removal of the other state 
officers from the board.^ 

1 See various annual reports of state assessors, especially that for 
1886. See also "Tax Laws of New York," by W. W. Saxton, New 
York, 1880, Chapter I. 



CHAPTER VIII. 

EXPERIENCE OF OTHER STATES. 

I. NEW HAMPSHIRE. 

HON. GEO. T. SAAVYER, as chairman of a special tax 
commission, made a report to the legislature of New 
Hampshire in 1876, in which he estimates that from one-half 
to one-third of the personal property in that state subject by 
law to taxation escapes, and he recommends radical changes 
in the tax laws. 

n. CONNECTICUT. 

The following remarks are quoted from the " Report of the 
Special Tax Commission," made in 1887 : " A comparison of 
the grand lists of the state from 1864 to 1885, as given in the 
table appended to this report, will show that the proportion 
of those intangible securities to other taxable property has 
steadily declined from year to year. In 1855 it was nearly 
ten per cent, of the whole ; in 1865 about seven and one- 
half per cent.; in 1875 a Httle over five per cent.; and in 
1885 about three and three-fourths per cent. Yet, during 
the generation covered by these statistics, the amount of 
state, railroad, and municipal bonds, and of Western mort- 
gage loans, has very greatly increased, and our citizens have 
invested large sums in them in almost or quite every town 
in the state. Why, then, do so few put them into the tax 
list? The terms of the law are plain, and the penalties for 



EXPERIENCE OF OTHER STATES. 189 

its infringement are probably as stringent as the people will 
bear. Many attempts have been made from early times to 
create more effectual ones, but with little success. . . . The 
truth is, that no system of tax laws can ever reach directly 
the great mass of intangible property. It is not to be seen, 
and its possession, if not voluntarily disclosed, can, in most 
cases, be only the subject of conjecture. . . . Such consid- 
erations as these, coupled with the results of an investigation 
of now nearly three years into the practical working of our 
tax system, have brought us to the conclusion that all the 
items of intangible property ought to be struck out of the 
list. As the law stands it may be a burden upon the con- 
science of many, but it is a burden on the property of the 
few ; not because there are few who ought to pay, but be- 
cause there are few who can be made to pay. Bonds and 
notes belonging to estates of deceased persons or infants 
are generally traced through the Probate Records, and 
brought into the tax list ; but those held by an individual 
are, for the most part, concealed from the knowledge of the 
assessors; nor do they, in most towns, make much effort to 
ascertain their existence. The result is that a few towns, a 
few estates, and a few persons of a high sense of honesty, 
bear the entire weight of the tax. Such has been the uni- 
versal result of similar laws elsewhere."^ 

III. MARYLAND. 

The defective assessment of personal property in Mary- 
land is a matter familiar to all citizens of that state, and it 
needs no lengthy treatment here. 

The Appeal Tax Court of Baltimore estimated in 1881, 

^ " Report of the Special Committee of Connecticut on the Subject of 
Taxation," January session, 1887. Pages 23, 26, l"]. 



190 TAXATION AS IT IS. 

that fifty millions of dollars were in this city invested in 
United States bonds or other government securities, in addi- 
tion to those used in banking. Now, these bonds can be 
openly manipulated in such manner as to render a large 
share of the personal property of Baltimore untaxable. 
They can pass from hand to hand, and debts can be created 
on them. It is customary for corporations and wealthy 
individuals to invest in bonds temporarily, to avoid taxation. 

One of the questions propounded to the Appeal Tax 
Court of Baltimore, by the tax commission of 1881, was 
this : " To what extent do you succeed in reaching invest- 
ments made by residents of this state, in private securities 
of any kind?" The answer was: "We utterly fail in 
reaching private securities of every description. Here and 
there only have they been returned by some conscientious 
holder." The city collector was asked this question by the 
same commission : " Does your experience enable you to 
suggest any effective way of collecting taxes on personal 
property? " He replied : "The collection of taxes on per- 
sonal property is attended with so many and such insur- 
mountable difficulties that I am at a loss what suggestion to 
make looking to a more effective collection." 

It may be further remarked that the same tendency to 
reduce the relative assessment as the wealth of the tax-payer 
increases, is found in Maryland as well as in other states. It 
is seen even in the case of real estate, although the evil is, I 
think, not so marked with us as it is elsewhere. Neverthe- 
less, a house worth two, three, four, or five thousand will, in 
Baltimore, at any rate, be assessed for nearly its true selling 
value, and sometimes for more, while a house worth from 
thirty to eighty thousand or more will probably not be as- 
sessed for over two-thirds of its value, the owner arguing, and 
with som.e plausibility, that it could not be sold for what it 



EXPERIENCE OF OTHER STATES. 191 

cost. It may be doubted, however, whether the legislature 
intended those whose means enables them to build houses so 
expensive that there is no market for them, to bear a smaller 
relative burden than others. 

It is interesting to notice that the necessities of the case 
have led to a practice in Baltimore, with reference to the 
taxation of personal property, somewhat similar to that of 
Savannah. There are not two different rates for real and 
personal property, but personal property is assessed in pro- 
portion to the income it produces. Personal property is so 
assessed that it yields three per cent, on the assessed valua- 
tion. A thousand dollar bond bearing three per cent, inter- 
est, for example, would be assessed for only $300. It is 
found that a higher tax will drive personal property from 
Baltimore. Even this arrangement makes taxation high. 
The state and city tax rate for Baltimore in 1888 is ^2.07!. 
Every ten dollars in income from personal property must 
pay, then, $2.o7f, or nearly twenty-one per cent. This is 
not a legal arrangement like the Savannah system. It is, in 
fact, illegal, but it is the best thing which can be done under 
our antiquated tax laws. There is a similar arrangement 
authorized by law for the assessment for state taxation of 
the public debt of Maryland Hable to taxation, whether 
owned by residents or non-residents. Debt bearing 6 per 
cent, interest is assessed at par ; debt bearing 5 per cent, 
interest at $85 in the hundred ; debt bearing 4^ per cent, 
interest at ^80 in the hundred ; debt bearing 3 per cent, in- 
terest at ^64 in the hundred. The state treasurer simply 
retains the tax, and thus the difficulty encountered in Ohio 
is obviated. Mortgages in Maryland are exempted from 
taxation by law.-^ 

1 Parts of Maryland retain features of the financial methods of the 
last century. The antiquated arrangement of farming out the collection 



192 TAXATION AS IT IS. 



TV. ILLINOIS. 

Dr. PatterCs Essay. 

Dr. Simon N. Patten wrote a work called " Das Finanz- 
wesen der Staaten und Stadte der Nordamerikanischen 
Union" (Finances of the States and Cities of the United 
States), published in Jena, Germany, 1878, which deals chiefly 
with taxation in Illinois, and which reveals a state of things 
in that commonwealth precisely like that described in other 
states. The assessed valuation of property in Illinois in 1875 
was as follows : — 

Millions of Dollars. 

Cattle 80 

Railroads 60 

Real estate 780 

All other property 165 

Total 1085 

Real estate and railroads paid seventy-eight per cent, of 
the taxes, cattle seven per cent., leaving only fifteen per cent. 

of the revenues still exists in IMaryland. As already mentioned, the 
collection of taxes in Harford County is sold at auction to the lowest 
bidder. In Kent County landed property is divided into three classes, 
and horses and cattle are uniformly assessed. The details in regard to 
the assessment of property in Kent County are given in the following 
letter which I received from Hon. James Alfred Pearce : — 

" It appears from the assessment books that practically all farming 
lands were divided into three grades -^ at $35, ^25, and ^15 per acre. 
There is no tract so far as I have been able to find, assessed at over 
^35, and there are very few tracts of farming land assessed at less than 

" Some small parcels of from one to ten acres, and improved with 
good dwellings, are assessed higher, but these are not classed as farm- 
ing lands. 

"Again in some cases, more numerous than I had supposed, persons 



EXPERIENCE OF OTHER STATES. 193 

for all other property, which is, of course, absurd. Dr. Pat- 
ten calls attention to the fact that assessors and collectors of 
taxes are elected for one year only, and as a system of rota- 
tion seems to meet with favor on the part of voters, they are 
devoid of that experience which is an indispensable condi- 
tion of a faithful performance of duty. The fact that one 
has enjoyed office for a year is regarded as a good reason 
why some one else should have a chance. Voters good- 
naturedly consider a special misfortune which has befallen 
one of their number, or any special need, as a reason why 
he should be elected, and from motives of pity, weak and 
inefficient men are elected. This appears, as far as my ob- 
servation has extended, to be common everywhere in the 
United States. 

appealed to the Board of Control and Review, and these reduced valua- 
tions in some cases to ^30, in some to ^28, $20, and $18, and also re- 
duced marsh, hillside, and other waste portions of large tracts to ^10 
per acre or $5 per acre, so that there is an apparent want of uniform- 
ity, and lack of classification. Still, I think it is safe to say that after 
examination I find three-fourths of the farming land in the county 
embraced in the three grades of $35, ^25, and $15. There is an abso- 
lutely uniform assessment of farm cattle as follows : — 

Horses and mules, each ^50 

Cattle 20 

Hogs 5 

Sheep 4 

The exceptions to this classification are so few as to be insignifi- 
cant. A few stallions kept for breeding purposes and a very few fine 
driving horses are assessed higher, but probably not twenty in the 
county are so assessed. There have been a good many changes made 
in the assessments since 1876 by the County Commissioners under their 
general authority to correct assessments, but in spite of all these, I still 
think that three-fourths of the land is within the three classes men- 
tioned. Of the lands assessed at $35, some would probably bring ^75, 
some ^65, some $50, some ^40. 



194 TAXATION AS IT IS. 

Dr. Patten draws the justifiable conclusion that the failure 
of the system of taxation in Illinois is accounted for by the 
nature of the system itself, and that that must be changed to 
produce any considerable improvement. The practice of 
confining one's self to the one direct tax on the assessed 
value of property must, he thinks, be abandoned. 

Dr. Patten examines the allegation that the cause of high 
taxation is to be found in universal manhood suffrage, and 
disproves it satisfactorily. He finds it rather in the control 
of real estate speculators, who have taxed the people for the 
improvements of their property. Taxation has increased 
more rapidly in small cities than in large cities, and in sev- 
eral counties in Illinois where the property owners were 
clearly in the majority, he found that the tax rate was higher 
than in Cook County, in which Chicago is situated.-^ The 
following tables are instructive : — 

1 When Mr. Enoch Pratt offered to give over ^1,000,000 to Balti- 
more on condition that the city should appropriate ^50,000 a year for a 
free library, I think there was no serious opposition on the part of the 
rich, but one of the poorer wards actually voted against an acceptance 
of this magnanimous offer ! Workingmen in Buffalo recently pro- 
tested against improvements which are being carried forward in the 
interest of real estate owners. The Real Estate Record and Builders' 
Guide, of New York, for March 31, 1888, says: "Towns like Eliza- 
beth, N.J., have been bankrupted by the owners of realty, who insisted 
upon improvements which were fifty years ahead of any possibility of 
their being needed." There is reason to believe that large real estate 
owners in New York City work bills through the legislature of New 
York for local improvements, to be paid for by special assessments on 
the property improved, which bills, however, are purposely drawn with 
legal flaws in them, and that after the improvements are made, the 
law is declared by the court of no effect, which throws the cost of the 
improvements on the tax-payers. It would be possible to mention names. 
The reader will do well to consult Mayor Hewitt's messages of 1888, in 
which he complains of the burdens by this means thrown on the city. 



EXPERIENCE OF OTHER STATES. 



195 



%-l 



p 



PERCENTAGE OF 
TAX ON PROPERTY. 



INCREASE IN TAXES, 
FROM 1866-76, IN 
PERCENTAGE. 



196 



TAXATION AS IT IS. 



■ • COUNTIES. 


TOTAL TAXES. 


TOTAL TAXABLE 
PROPERTY. 


PERCENTAGE OF 

TAX ON 

PROPERTY. 




Dollars. 


Dollars. 




Alexander . . . . 


166,389 


2,408,000 


6.9 


Pike . . . 






432,888 


11,488,000 


3-7 


Pulaski . . 






109,775 


898,000 


12.2 


Gallatin . . 






92,403 


1,869,000 


4-9 


Saline . . 






77,760 


1,615,000 


4.8 


Williamson 






86,449 


2,336,000 


3-7 


Cook . . 






9,597,041 


229,927,000 


4.1 


Effingham . 






143.713 


3,942,000 


3.6 


Hamilton . 






68,014 


1,697,000 


4.0 


Hardin . . 






26,378 


683,000 


3.8 


Johnson . . 






61,536 


1,365,000 


4.5 


Randolph . 






201,809 


5,392,000 


3-7 


The State . 






29,007,461 


1,085,540,000 


2.6 



It is true that two parties, tax-payers and non-tax-payers, 
have never been opposed to each other, as it is true that 
men of means control all our legislatures and municipal 



He does not, however, appear to have ever heard that this was wilfully 
brought about. The following quotation is an extract from a report of 
the Pennsylvania Commission on cities, made in 1878: "The undue 
accumulation of debt in most of the cities of the state of Pennsylvania 
has been the result of a desire for speculation on the part of owners of 
property themselves. . . . Large tracts of land outside the built-up por- 
tions of cities have been purchased, combinations made by men of 
wealth, and councils besieged until they have been driven into making 
appropriations to open and improve streets and avenues largely in ad- 
vance of the real necessities of the city." Professor Henry C. Adams 
says he is fully prepared to accept this testimony. See his "Public 
Debts," page 354. The plan which I recommend in Part III., whereby 
cities may secure a portion of the increasing value of real estate, would 
do much to prevent attacks of speculators on the public treasury. 



EXPERIENCE OF OTHER STATES. 197 

councils. Speculators, property-owners in Western cities, 
have spent public money lavishly for the sake of helping for- 
ward a " boom," and then when the crash has come, they 
have cried out, " We are ruined by universal suffrage ! " 

The Report of the Revenue Commission of 1886. 

This report indicates no improvement in the financial sys- 
tem of Ilhnois since Dr. Patten's essay was published. The 
following extracts from this report reveal some of the de- 
fects of present methods of taxation in Illinois : — 

" The gross inequality in the assessments of different 
pieces of property of the same kind, owned by different 
individuals in the same community, and of different kinds 
of property, regardless of ownership ; as, for instance, real 
estate and personalty — a large proportion of the personalty 
escaping all taxes. 

"The arbitrary and unjust operation upon individual as- 
sessments of the system of equalization between counties by 
the state board. 

"The inadequacy of existing methods to discover and 
estimate valuable interests which have grown out of the 
inventions and refinements of modern commerce. 

" The want of a central and efficient supervision of the 
administration of the revenue laws throughout the state. 

" The realty of one man is assessed at one-third, one-half, 
two-thirds, or even the full measure of its actual value ; 
while that of his neighbor is assessed at one-sixth, one-tenth, 
one-twentieth, or, as was shown in one instance of consider- 
able magnitude, one twenty-fifth of its actual value. The 
owner of the one pays, as his annual tax, five or six per cen- 
tum of the whole capital invested, while the owner of the 
other pays one-fourth or one-fifth of one per cent. Such 
distinctions are too invidious to be meekly borne. 



198 TAXATION AS IT IS. 

" The discriminations in favor of personal property, and 
against realty, are glaring and unjust, amounting, in some 
species of the former class, to an almost total escape from 
taxation. 

"For instance, for the year 1884, in Cook County, contain- 
ing the great and wealthy city of Chicago, the total valua- 
tion of 

Credits of bank, banker, broker, etc., was . . . ^98,615 

Credits of other than bank, banker, etc 209,463 

Bonds and stocks 755830 

Shares of capital stock of corporations not of this 

state 100 

"The second objection to the operation of the present law 
is a very grave one, and was uttered and reiterated by 
nearly every one who appeared before us. 

" For the same year, the valuation of credits, other than 
those of bank, banker, etc., in the following counties, stood 
thus, to wit : — 

Cook ^209,446 

De Kalb 377,22^ 

Kane 348,913 

McHenry 400,881 

Winnebago 725,218 

Ogle 432,866 

Stephenson 239,758 

Henry 236,987 

La SaUe 632,681 

Knox 793j8i9 

Pike 344,083 

Morgan 461,730 

McLean 591,586 

Coles 250,209 

" In this important element of wealth, always disproportion- 
ately augmented in large cities, as compared by population, 



EXPERIENCE OF OTHER STATES. 199 

small rural counties surpass metropolitan Cook, and some of 
them three or four fold. 

" Equalization would seem plainly necessary. But how 
does it work under the present system ? The state board 
deals with the aggregate assessment of lands, lots, and per- 
sonal property — three classes — and adds to, or subtracts 
from, each class a fixed and arbitrary percentage ; thus 
raising or lowering all property in each class in equal pro- 
portion. Thus upon pieces of property already assessed at 
a large fraction of their value, frequently an increase of 
valuation is made, which carries them above their market 
value. 

"By way of illustration, we cite one instance in Cook 
County, as follows : — 

"A block of real estate worth ^100,000 was assessed at 
^90,000. The Board of Equalization added sixty-seven per 
cent., making the equalized assessment of that property 
^150,300. If a scrupulous owner of credits in Cook County 
should return them at their value, he would be ruined by an 
equahzation that would bring the county to its full equalized 
value. In this particular, with other counties, similar instan- 
ces, more or less extreme, occur every year." 

It is to be observed that the Illinois system of equaliza- 
tion is different from that of New York. In Illinois the 
assessments of individuals for all purposes are increased. 
The rate of taxation is not changed, but the basis for the 
individual is changed. This makes the equalization apply 
to local taxes, which is not the case in New York state, and 
it can be very oppressive if one has made an honest return. 
The equalization of Illinois appHes to personal property as 
well as real property, whereas it applies only to the latter in 
New York state. A further difference is that the Illinois 
authorities in equalization are not obliged to keep the 



200 TAXATION AS IT IS. 

original aggregate valuation of all property. It is provided 
that in the county equalization the result must be kept as 
near the total assessed valuation as possible. 

A fiirther difference between the New York and Illinois 
systems is this : The New York state authorities demand of 
the counties fixed sums, and each county demands of its 
to^^^ls fixed sums, and rates must be laid to meet these 
demands. Illinois demands a certain percentage of the 
assessed value of all property, and whatever that yields, more 
or less, flows into the state treasury. When Dr. Patten 
wrote his essay, — and probably it is still the case, — the 
collections were poorly made, and showed radical defects in 
the entire system. ^ 

It is necessary in Illinois to raise the rate sufficiently to 
cover the loss on account of failure to collect, and cost of 
collection. The estimated loss on account of both items 
— failure to collect, and the expenses attending the raising 
of the revenues — was as follows from 1865-1875 : — 

1865-1871 (inclusive) 10 per cent. 

1872 II 

1873 18 " 

1874 17 " 

1875 13 " 

It is remarked by Dr. Patten that the increased loss after 
1872 was due to severer laws passed in that year which led 
to the assessment of property from which no taxes could be 
collected. 

Testimony of this sort might be extended indefinitely, and 
from all parts of the country. I might quote the testimony of 
a tax-payer of Charleston, South Carohna, one of the largest 
tax-payers in the state, who told me that only a fractional 
part of personalty was reached, and that it was impossible to 



EXPERIENCE OF OTHER STATES. 201 

carry out the law with regard to that kind of property, as 
the tax would absorb so large a proportion of the income. 
This gentleman stated that he paid only on part of his per- 
sonalty, but that the tax department was only too glad to get 
what he was willing to pay. I might refer to the published 
lists of tax-payers in Brooklyn and New York City, and call 
attention to the ridiculous assessment of personalty standing 
against names known far and wide for large wealth. I 
might call attention to a single estate whose representatives 
acknowledged a taxable personalty of thirty-three millions, 
but refused to pay on more than eight millions, under 
threats of withdrawing their property from the reach of the 
tax-gatherer in the city. But this is entirely needless. The 
actual experience of our various American states and cities 
affords ample illustration. 



CHAPTER IX. 

OTHER FEATURES OF EXISTING FINANCIAL SYS- 
TEMS OF AMERICAN STATES AND CITIES. 

INTRODUCTORY REMARKS. 

WERE this a book intended primarily for specialists, it 
would require two or three volumes to describe ade- 
quately the financial systems of American states and cities. 
It must, however, be distinctly understood that this is pri- 
marily a practical work for practical people. Its purpose is 
to draw attention to the main features of American state and 
local finance, and not to enter into all the complicated details 
of administration and all the complexities of legislation and 
judicial decisions. This book aims to present an outline 
sketch of what exists, and to indicate the lines along which 
financial reform must move. Readers will be able to fill in 
the sketch here given by personal inquiry and research. 
Teachers who may use this book in the class-room will dis- 
cover many points which should be further explained to their 
classes, and will find it advantageous to assign topics to their 
students for further elucidation. Local tax authorities will be 
able to give the needed information about local taxation, and 
state laws will be found useful in a study of state taxation, 
while intelligent legislators and state officials will be glad to 
explain to classes the practical operations in which they are 
engaged. 



AMERICAN FINANCIAL SYSTEMS. 203 



ORDINARY BUSINESS LICENSES AND OCCUPATION TAXES. 

All cities and many states have licenses for a few occupa- 
tions, and these are generally specific. Fixed sums are paid 
for the privilege of engaging in a few specified gainful pur- 
suits. The privilege of retailing liquors is probably taxed 
in every American city, while state and county often add a 
license tax to the local license tax. In a Georgia city liquor- 
dealers pay four license taxes ; namely, one to the city, 
one to the county, one to the state, and one to the federal 
government.^ 

Boston has license taxes for pedlers, keepers of billiard 
tables, pawn-brokers, carriages, second-hand dealers, horse- 
car drivers, junk-dealers, owners of dogs. Owners of hacks 
for hire are often taxed by the license system. Keepers of 
bowling-alleys and dealers in fireworks often pay a license 
for this privilege. Keepers of intelhgence offices are among 
those who appear to be frequently required to pay an annual 
license tax. Pedlers are frequently required to take out a 
license. Virginia, for example, passed a law approved Janu- 
ary 27, 1888, taxing each pedler ^300 when he travels on foot 
and ^500 provided he "peddles otherwise than on foot." 
Newsboys and bootblacks pay a license tax of twenty-five 
cents each in Cleveland, Ohio. The object of this license 
fee is probably to bring about a registration of newsboys 
and bootblacks. 

Although these charges for the licenses are generally spe- 

^ A dealer in intoxicating liquors in Savannah pays as follows : — 

1. Federal government license, ^25. 

2. State license, ^50. 

3. County license, $100. (Chatham County.) 

4. City license, ^200. 



204 TAXATION AS IT IS. 

cific, the amount collected from each licensed person is not 
always the same. Keepers of horses for hire are sometimes 
charged so much for each horse or each carriage. Street- 
car lines are often charged so much for each car. Keepers 
of billiard tables are frequently charged a certain sum for 
the first billiard table and a less sum for each additional 
table. 

Northern states and cities require licenses for a few speci- 
fied pursuits only, and leave every one perfectly free to enter 
all other occupations according to opportunity and inclina- 
tion. The system of freedom obtains. 

Southern states and cities pursue a different policy ; namely, 
that of restriction. A special tax is exacted from every one 
who within their limits attempts to gain a livelihood, and the 
purpose of the license system is twofold : first, revenue ; 
second, local protection by exclusion of competition. It 
would require too much space to give all the regulations 
concerning licenses in Southern states ; indeed, this entire 
book would not be sufficiently voluminous for that purpose. 
It may be said, however, that the license system is universal 
south of Mason and Dixon's line. A few examples will be 
given which a perusal of state laws and municipal ordinances 
will show any one to be merely typical. 

In Charleston, South Carolina, there are fifty-six classes of 
business to which licenses are issued, besides a few special 
licenses. One gas company paid a license of ;$5oo ; seven 
building and loan associations, a license tax of ^50 each ; two 
railroad companies, ^500 each; two real estate agencies, 
^50 each; one telephone company, ^500; two telegraph 
agencies, $500 each ; eight auctioneers and real estate bro- 
kers, ^75 each; twenty-three billiard tables, ^25 each; 
twelve boarding-houses and hotels, from ^10 to 1 100, ac- 
cording to the number of rooms ; barbers, for each chair, 



AMERICAN FINANCIAL SYSTEMS. 205 

$3 ; one circus, $500 ; builders, master mechanics, and work- 
men of all trades and employments, not specially named 
elsewhere, sixty-six employing no hands, $\2 each, and thirty 
employing not over ten hands, ^30 each ; four dentists, 
whose gross business does not exceed $1000 each, $15, and 
four whose gross business does not exceed $2000 each, $25 ; 
three dealers in sewing-machines pay from. $20 to ^40 each, 
according to sales ; commercial brokers, ^100 each ; five ste- 
vedores, $50 each ; eight merchant tailors, ^50 each ; dealers 
in merchandise not specially named elsewhere pay from 
^20 to $500, according to sales. The total receipts of 
Charleston for the year ending December 31, 1886, from 
licenses, amounted to ^128,459, out of a total revenue of 

^538,336.52.' 

A thoroughly "protected " town is Charlotte, North Caro- 
lina. Every bar-keeper must pay $1000 for the privilege of 
selling spirituous, vinous, and malt liquors ; every express 
company, ^250 ; every gas or electric-lighting company, 
i^ioo ; on every fruit or vegetable stand, ^10 must be paid ; 
every bootblack must pay ^3 ; surgeons, dentists, physicians, 
la\vyers, civil engineers, etc., ^15 each. 

The " Schedule of Licenses " in the tax ordinance of the 
city of Atlanta, for the year 1886, occupies six pages of the 
printed ordinance. 

Persons who barter or sell goods within the state of Mary- 
land must first procure a license, called a " trader's license," 
for which the following charges are made : — 

If the applicant's stock does or will not exceed ^1,000, a license of $12.. 

If over ^1,000 and less than $1,500, a license of $15. 

" 1,500 " " 2,500, '• " 18, 

" 2,500 " " 4,000, " " 22. 

" 4,000 " ** 6,000, " " 30, 

1 See " Year-Book of the City of Charleston," 1886. 



206 



TAXATION AS IT IS. 



8,000 




' 10,000, 


10,000 




' 15,000, 


15,000 




' 20,000, 


20,000 




' 30,000, 


30,000 




' 40,000, 


40,000 or 


over, 





If over $6,000 and less than 8,000, a license of $40, 

50. 

" 65 

80, 

" 100. 

125 

If 40,000 or over, " " 150, 

A female engaged in vending millinery, whose stock does not at any 
time exceed $500, is entitled to a license for $6. 

The receipts from this source of revenue for the year end- 
ing September 30, 1887, were ^187,187.29. Many other 
persons pay Hcenses in Maryland, as, for example, brokers, 
bankers, pedlers, liquor-dealers, and express companies. The 
total receipts from licenses, for the year ending September 
30, 1887, amounted to $521,311.14 out of total receipts of 
$2,440,363.53 ; but part of the total receipts was expended in 
the redemption of state stock, and a considerable portion was 
used in purchasing stock for the sinking fund. The ordinary 
expenses of the state government amounted to only $1,699,- 
063.44. It will be seen that a large proportion of state ex- 
penses is provided for by the Maryland system of licenses. 
The property tax of i8| cents on the $100 for this period 
yielded $910,949.50. Among the license fees of Maryland 
which has yielded a considerable income up to the present 
year was the marriage license of $4.50, of which fifty cents 
was for the clerk of the court. The marriage license fees for 
1886 yielded the state $24,226.98 net. This fee was reduced 
to one dollar in 1886, because it was considered unjust, 
oppressive, and a restraint upon marriage. Maryland taxed 
bachelors in the last century, to encourage matrimony, and 
it was undoubtedly a departure from ancient poHcy to tax 
marriage. 

The system of hcenses on persons engaged in ordinary 



AMERICAN FINANCIAL SYSTEMS. 207 

pursuits is a most vicious one from every point of view. It 
tends to promote pauperism, because it makes it difficult to 
enter any pursuit which one may desire to follow. The 
license fees are considerable, and are a great burden to per- 
sons beginning business, as every one who has lived in a 
Southern city knows. 

When a man has failed in one pursuit, the hcense fee for 
entering another is often an insurmountable obstacle. Li- 
censes prevent freedom of movement. It is desirable that 
every one should be at liberty to move about from place to 
place, and to change his pursuit from time to time until he 
can find the right place and the right occupation, and then 
be enabled to gain a livelihood. A considerable proportion 
of the improvements in modern times, as compared with 
previous centuries, is due to increased freedom of movement. 
The license system may be fairly called mediaeval in its 
character. The tendency of modern times is supposed to 
be in favor of giving a man every opportunity to make the 
most of his talents, and particularly to place no obstacle in 
the way of his becoming independent and self-supporting. 
The license system pushes the comparatively weaker ele- 
ments and the industrially unfortunate down, and then helps 
to keep them down. 

The license system imposes regressive taxation upon those 
who live under it. The rate of taxation increases as one's 
means decrease. It violates the fundamental principle of 
equality of taxation. 

The license system drives men away from the states and 
cities in which it exists. It comes repeatedly to the notice 
of the careful observer that one who is more or less doubt- 
ful about starting business in a Southern city is finally decided 
not to do so by the license tax. Those who have left such 
a city would, in some cases, undoubtedly have developed a 



208 TAXATION AS IT IS. 

business which would have been beneficial to the city and 
state, had they not been deterred by the license taxes. Taxes 
on property are generally high in cities which have licenses. 
Licenses like many of ours remind me of taxation in the 
time of feudahsm, when only those were taxed who were too 
weak to resist. Those who are prosperous find specific 
licenses a small burden, and those who are just entering a 
business career are too weak to resist successfully. Licenses 
thus encourage monopoly and are undemocratic. Of course 
the case of licenses for natural monopolies and corporations 
is essentially different, and in case of liquor licenses restric- 
tion is the very thing aimed at, and is the justification of 
high hcense.-^ 

It is strange that our Southern states, which have prided 
themselves on their liberal views in regard to international 
trade, should maintain the most oppressive system of local 
protection known to the civilized world. 

Licenses on corporations of a quasi public nature, or those 
engaged in pursuits which are natural monopolies, ought to 
be in proportion to gross revenues, and not specific. South- 
ern cities usually, however, tax street-car lines, gas companies, 
express companies, telegraph and telephone companies, and 
electric-lighting companies at a ridiculously low figure be- 
cause they include licenses for them under the general license 
system. Baltimore pursues a more rational policy with ref- 
erence to street-car companies, in imposing a license fee on 
them of nine per cent, of gross revenues, in addition to a 
license charge of $5 for each car, and in addition to the 
regular tax which they pay to state and city on the value of 

1 On the same principle the license tax in Savannah of $500 on 
"every owner, proprietor, or keeper of a 'bucket' shop, or a place 
where ' futures ' are sold," might be commended. Perhaps it ought to 
be four times as high. 



AMERICAN FINANCIAL SYSTEMS. 209 

real and personal property. In 1887 the city of Baltimore 
received from licenses for street-car companies $132,167.26. 

POLL TAXES. 

Poll taxes exist in most of the Southern and New England 
states and in some of the other states. Poll taxes are un- 
worthy of a civilized nation in the nineteenth century. They 
are to be rejected, also, from purely economic grounds. In 
order not to be impossible of collection without great hard- 
ship, they must be so low as to yield Httle to the public 
treasury. Poll taxes are both state and local. In some 
states only state poll taxes are known, but in others both 
state and local poll taxes exist. This is the case in North 
Carolina. Charlotte, for example, levies a poll tax of $2.10 
on each male between the ages of twenty-one and fifty years, 
and the state collects a poll tax on males between the same 
ages, which may not, however, exceed the state tax on $300. 
Other facts about poll taxes will be found in Part IV. 

The right of suffrage is often made conditional on the pay- 
ment of a poll tax, but this condition only gives rise to cor- 
ruption. It is well known that in New England, before 
election, the political parties pay the poll taxes of delin- 
quents, in order to secure their votes.-^ 

The road tax is often of the nature of a poll tax. This 
is the case in Atlanta, Georgia, where, as already mentioned, 
it amounts to $3.50. Atlanta is the only place, so far as I 
know, where anything like a poll tax is strictly collected, and 
here it is done by compelling those who can not or will not 
pay the road duty in cash, to work for ten days on the high- 

1 The Pennsylvania legislature of 1887 passed an amendment to the 
constitution abolishing the payment of a poll tax as a prerequisite for 
voting. This amendment now goes to the next legislature. 



210 TAXA TION AS IT IS. 

ways. The undemocratic character of a high capitation tax 
like that, having no reference to the abihties of the tax- 
payers, is sufficiently ob\dous. Georgia has a state poll tax 
of ;$i.oo, but it is not rigidly collected. 

A competent and well-informed lawyer of Macon, Georgia, 
writes me as follows about the poll tax in his state : — 

" There is no poll tax in Macon, other than the poll tax 
of $i.oo imposed by the state on all its citizens. It is 
not rigidly collected by the state tax officials in this county. 
If a man has no money, the tax cannot be collected, unless 
he earns wages. In the latter event (inasmuch as the state's 
lien for taxes is paramount to all exemptions) the daily, 
weekly, and monthly wages of the delinquent may be reached 
by process of garnishment served upon his employer. I have 
heard of but one county in the state where the poll taxes are 
thoroughly collected. It was done there by the method I 
have just mentioned. All the farmers and others who em- 
ployed hands were garnished, and in that way the wages 
were reached. 

" The only years in which a general collection is made of 
poll taxes are those in which elections are held under the 
local option laws. In these elections the Hquor men who 
are able to draw upon the inexhaustible resources of the 
whiskey ring pay all the poll taxes of the negroes and pauper 
whites who will vote the ' wet ' ticket. Payment of taxes is a 
condition precedent to voting. These elections have, there- 
fore, brought into the treasury, in this way, large amounts 
of money which would otherwise never have been col- 
lected. 

"There is, in addition to the state poll tax of Si.oo, a 
street tax of ^3.00, imposed by the municipality. This is 
per capita, and w^thout reference to the individual's prop- 
erty. The poor people do not work it out. If a person has 



AMERICAN FINANCIAL SYSTEMS. 211 

no property he does not pay the tax, unless he does so with 
the object of retaining his municipal suffrage, which he 
would forfeit if he was in arrears for taxes. 

" It frequently happens in municipal elections that the 
respective candidates furnish the money to such of their 
supporters as are tax delinquents, for the purpose of en- 
abhng them to vote." 

A friend from Georgetown, Kentucky, equally compe- 
tent to speak on taxation, A\Tites me as follows about poll 
taxes in Kentucky : — 

''' The poll tax in many counties is quite heavy, but there 
is no way of enforcing payment, and there is always a very 
large list of citizens from whom it is never collected. The 
sheriff is, at the end of the year, credited by the county 
court with the number of polls in the 'delinquent list,' and 
that is the end of the matter. This hst of delinquents is 
quite large, though it is impossible to say exactly how large 
in all the counties. In our county (Scott County) it has, 
for the last few years, included from something over one- 
third to considerably over one-half of the legal voters in the 
county. Scott County is very far above the average county 
in the state in point of wealth, etc., and I therefore have no 
hesitation in saying that, taking the state as a whole, the 
number of those who fail every year to pay their poll tax is 
much more than one-half the voters. 

" There has been some talk in the legislature of making 
failure to pay poll tax a misdemeanor, but as yet there is no 
way of compelling payment by those who have no visible 
property. They are not made to work on the highways. 
The latter are maintained in most of the counties in the 
old-fashioned way — a supervisor calls out all the men in 
his district and makes them work the road at intervals in the 
year. A few counties have a road tax and apply the pro- 



212 TAXA TION AS IT IS. 

ceeds to road purposes in the more modern way, but the 
bulk of the state is under the old system." 

A prominent state official of Wisconsin writes me as fol- 
lows regarding the poll tax in this commonwealth : — 

" Yes, we have a poll tax, d it. I think if it were or 

could be collected, I would favor a poll tax, but only those 
who pay other taxes are now compelled to pay on their 
polls. You see how that is : when I go to pay my other 
tax, they add on the |i.oo for my poll ; but all who have no 
personal property or real estate tax escape poll taxes, as they 
do not, as a matter of course, go to the tax-gatherer's office, 
and the collector never goes after or makes a list of them. 
Now the poll tax was intended to reach the very class it never 
touches, in order to reduce the burdens of those owning 
property ; but in reality it doesn't gain a dollar from the un- 
taxed, while it adds more burdens to those who already pay 
their full share, and for whom the tax was designed to be a 
relief." 

SPECIAL ASSESSMENTS. 

Special assessments on property benefited by local im- 
provements are common in American cities. New streets 
are sometimes paid for entirely by those through whose 
property they pass, and sometimes the expense is divided. 

In Baltimore, pavements are paid for by the property- 
owners and the city. The city pays one-third and the 
abutting property-owners on either side pay each one-third. 
Occasionally streets are paid for entirely by general taxes. 
This does not seem right. Although taxes are not payment 
for services rendered, it seems perfectly proper that those 
who receive a marked and special advantage should pay 
more than others for the improvements. Improvements of 
the nature of parks and avenues are often paid for, in part 



AMERICAN FINANCIAL SYSTEMS. 213 

at least, by those who derive a special pecuniary advantage 
from their proximity. This has recently happened in Balti- 
more in connection with the Mt. Royal Avenue extension. 
It is proposed that those who derive a special advantage 
from the contemplated small parks in New York City shall 
pay a special tax.^ 

OTHER SOURCES OF REVENUE. 

" Conscience money " is a heading frequently seen in 
state and local financial reports, but generally for small 
sums. As probably nearly all readers understand, it is 
money sent without the name of the sender to the public 
treasury by some one who has defrauded the government by 
withholding money due, or otherwise, and w^io has been 
pricked by his conscience. Our federal government receives 
conscience money frequently, and occasionally sums of some 
importance. It is said that Wiirtemberg and England are 
the only other countries in which conscience money is a 
frequent item in the budgets. It has been remarked, how- 
ever, that the legislation of other countries may not be of 
such a character as to lead so frequently to fraud.- 

Public property and public works yield more considerable 
revenues in American states and cities than is ordinarily 
imagined. The reader will find in Part IV. as complete 
information on this point as I could gather. Here only a 
few illustrative facts will be presented. 

South Carolina owns phosphate beds below the river bot- 
toms, and from a royalty on the phosphates obtained from 
them she is able to defray over twenty per cent, of all her 

1 On this subject see Chapter XV., on " Taxation by Special Assess- 
nnents," in Cooley's "Taxation." 

2 See Helferich, m Schonberg's " Handbuch der Politischen Oeko- 
nomie, 2d edition, Volume III., page 169. 



214 TAXATION AS IT IS. 

expenses. A plan has even been proposed for working these 
beds by the state and defraying all expenses from the pro- 
ceeds. 

New York state has derived over $5,000,000 revenue 
from the state-owned salt-works of the Onondaga reser\'a- 
tion. 

Georgia derives $300,000 from the rental of the Atlanta & 
West Point Railroad. The total receipts for the year ending 
September 30, 1886, were $4,220,130.30. This smu includes 
^2,508,850 received from the sale of bonds, and applied to 
payment of state debt. The rental of a single railroad de- 
frayed about seventeen per cent, of all the ordinary expenses 
of the state. During the same year the state received from 
the Bank of Rome, $18,197.61, and from dividends from 
stocks, $2,410, 

The state of Illinois receives seven per cent, of the gross 
revenues of the Illinois Central Railroad as a special charter 
tax. This ought, however, to be regarded as a payment for 
a privilege, like the percentage of street-car receipts claimed 
by Baltimore, and not as a tax. It is, indeed, inadequate 
payment for what the road has received from the public. 
For the two years ending October i, 1886, the receipts of 
the public treasury of Illinois amounted to $4,666,443.85, 
of which the Illinois Central Railroad paid $725,207.93, or 
over fifteen per cent. 

Massachusetts has redeemed over one hundred acres of 
land now in the " Back Bay " district of Boston, which was 
formerly under water. The total net proceeds in cash value 
amounted to $4,275,644.73. This was the amount which 
accrued to the state after paying all expenses and making 
donations of land to Boston, to Trinity Church, to the jNIas- 
sachusetts Institute of Technology, to the Boston Society of 



AMERICAN FINANCIAL SYSTEMS. 215 

Natural History, and to the State Board of Education for 
the Normal Art School.^ 

Many of our states have money invested in bonds, on 
which they receive interest. Several of them own all their 
own bonds ; others own their own state bonds, local bonds, 
federal bonds, railroad bonds, and the like. 

States and cities have sinking funds, and moneys devoted 
to this fund are used for the purchase of bonds and other 
property to pay off debts at the expiration of a period, usu- 
ally prescribed. States and cities also hold trust funds, the 
income of which is used for the purposes determined by the 
nature of the trust itself. In January, 1887, Massachusetts 
had property in the sinking fund valued at ^18,964,412, and 
in trust funds, chiefly for educational purposes, bonds and 
notes valued at ^3,307,910.27. A part of the trust funds 
consists of money deposited by the United States with Mas- 
sachusetts in 1837, when the federal surplus was distributed 
among the states. Several of the states still hold the amount 
then received in trust for educational purposes. 

New York state holds trust funds invested chiefly in bonds 
of various descriptions. The funds of New York state 
amounted to ^8,706,488.52 on September 30, 1887, which 
sum yielded nearly ^550,000 revenue. The revenues of the 
funds are used mainly for educational purposes. West 
Virginia has an educational fund which, like that of New 
York, cannot be abohshed without a change in the state 
constitution. 

One of the municipal public documents of Philadelphia 
is the annual report on trusts. The principal one is the 
Girard trust, now worth a good deal over ten millions of 
dollars. Philadelphia owns gas-works which figure in the 
budget of 1887 for receipts of nearly three millions of 

1 Auditor's Report, 1886, pages 365-6. 



216 TAXATION AS IT IS. 

dollars. Richmond, Virginia, defrays a considerable portion 
of her expenditures from the profits on gas-works. 

New York City, like Baltimore, now receives an income 
from a portion of gross revenues of street-car lines, and, had 
not the people been plundered in a most shameful manner, 
New York might probably now defray three-fourths of her 
expenses from public property. 



CHAPTER X. 

THE TESTIMONY OF REASON. 

STATES NOT INDEPENDENT IN MATTERS OF TAXATION. 

WE must now turn from actual experience and ask 
whether there are any reasons in the nature of things 
which make experience what it is. It is not enough to show 
that a thing never has been done, to induce a rational man 
to desist from efforts to accomplish it, for we all know that 
brilliant success has often waited on him who refused to be 
convinced by a thousand failures. It is necessary to show 
that a thing cannot in all probability be done. 

It should first be remembered in any treatment of the 
subject of taxation, that any single American commonwealth 
like Maryland is not an industrial unit, but simply a part of 
a larger whole — the United States. Even the United States 
in its economic affairs is not by any means entirely inde- 
pendent, but it must often have regard to proceedings of 
other governments if it would act wisely. Still, the United 
States, taken together as one country, may fairly be regarded 
as an industrial unit, and in matters of direct taxation it need 
not inquire very minutely into the industrial situation in 
foreign lands. A single state is in an essentially different 
position, and may be well-nigh ruined by a failure to take 
into consideration interstate relations. 



218 TAXA TION AS IT IS. 



RETURNS ON PROPERTl^ OF A HIGH DEGREE OF MOBUJIY 
DEPENDENT ON GENERAL CONTRITIONS. 

There is a species of property which floats about from 
place to place with ease. We may say that property of 
this sort is endowed with a high degree of mobihty. This 
is the case, for example, with money for investment in 
mortgages or other securities. Now, the remuneration for 
property of this sort is to a large extent independent of the 
laws of a single state like Maryland. If in our state it is op- 
pressed, it will leave us for other regions, where it is more 
favorably treated. We may like this or not, but as men of 
sense we cannot wisely shut our eyes to the fact. It has 
ever been laid down as a maxim of taxation that only those 
things should be taxed which cannot leave us ; and those 
who advocate this rule of action do not have in view the 
special interests of holders of such property, but the general 
welfare. I would not wash to be understood as advocating 
this maxim without any qualification, but 'it appears to me 
clear that the legislature should always keep in mind the 
distinction between property which can and property which 
cannot leave us.^ 

From the time of Turgot and Adam Smith to the present, 
political economists have not ceased to warn people to be 
careful not to drive capital abroad by taxing it, and they 
have often in their timidity, gone too far in this direction 
and at times indeed appear to have given too much heed to 
what amounted to little more than blustering threats on the 

1" Never tax anything that would be of value to your state, that 
could and would run away, or that could and would come to you." 
Quoted from a pamphlet entitled "The Tax Question," by Enoch 
Ensley, of Memphis, Tennessee, 1873. 



THE TESTIMONY OF REASON. 219 

part of tax-dodgers. Nevertheless, no practical man can fail 
to move carefully in this matter. When those who do not like 
American institutions talk about taking their capital away 
from the United States, an amused smile of increduhty may 
be a sufficient reply. Where will they go ? Where else will 
their capital be so well protected, and at the same time 
yield so large a net return after defraying the burden of 
taxation ? When we are concerned, however, with a single 
state like Maryland, the case is essentially different. Capital 
of any high degree of mobility does, as a matter of fact, 
readily flow from state to state, and this interstate move- 
ment of floating capital was never so easy as it is to-day. 
Special companies have been formed to encourage this 
movement, and it is to-day often practically as easy through 
their assistance to invest money in a mortgage a thousand 
miles from one's home as in a mortgage on land in one's 
own country. 

The normal returns on floating capital are then deter- 
mined by general conditions in the United States, and over 
these we have comparatively little control. If our tax laws 
operate to depress the returns on floating capital far below 
what we may regard as their normal level, a portion, and a 
considerable portion, of our capital will leave us to our own 
detriment. The result will be that the farmer will find a 
poorer home market for his produce, on account of dimin- 
ished wealth in the state, while his lands will fall in value, 
and the workingman will likewise suffer from fewer oppor- 
tunities for profitable employment of his services. The 
money-lender will take his transportable commodity away 
from us, and instead of placing upon him a fair share of the 
public burdens, we will simply injure those who would 
borrow. 

It is important to consider this well. A. is a young man 



220 TAXATION AS IT IS. 

who wishes to acquire a home by savings from a not too 
generous income. Is he benefited by laws which make it 
difficult for him to borrow money with which to build a 
house or purchase a bit of land ? If the money-lender were 
walled up within the boundaries of Maryland, it might be 
that this young man could regard with indifference projects 
for taxing the desired loan ; but as he is only one of many 
possible borrowers throughout the length and breadth of 
the land, I do not see how he can escape loss by any ab- 
normal burden placed upon the lender of capital. Mort- 
gages are exempt from taxation in the state of ^Maryland. 
Does any one think that money could be had on mortgages 
in the city of Baltimore, for five per cent., if they were 
taxed as other property is taxed, namely, ^i.ySf on ^loo?-^ 
Turning this matter over in my mind, and looking at it 
from every possible standpoint, I fail to see how this ex- 
emption of mortgages is a special favor conferred on money- 
lenders. It is an exemption which makes the flow of capital 
to us easier, and the benefits are thus diffused throughout 
the community. 

I am aware that this is a point which has been much dis- 
cussed among the farmers of Maryland, and that many of 
them have criticised the exemption with a good deal of 
severity. I protest that no one has a friendlier feeling for 
the farmers of Maryland than I ; nor do I need to be told 
anything about the burdens which rest upon the farmer, and 
the hardships which he must undergo. No one has a more 
active sympathy with the trials of the farmer, for I know all 
about them by personal experience, having lived the first 
eighteen years of my life on a farm, and having had for a 
time its exclusive management. Nevertheless, I cannot see 
how the farmer is to gain anything by special taxes on mort- 
1 The rate for 1888 is $2.07f. 



THE TESTIMONY OF REASON. 11\ 

gages or floating capital. His desire to see the burdens of 
government distributed among the people in proportion to 
their abihty to bear them, is just, but he must obtain his end 
by other means. 

Money invested in mortgages, as well as other capital of a 
high degree of mobihty, is taxable by law in most states of 
the American Union, but as a matter of fact it nearly every- 
where escapes taxation. Now the returns on this kind of 
capital, especially in the form of interest, are adjusted to 
this practical exemption. This is seen in the fact that it has 
actually happened that the tax rate has in places exceeded 
the current rate of interest,^ which could not happen if a 
man expected to be taxed. Otherwise, he would be plan- 
ning to pay for the privilege of lending some one money. 
Nearly everywhere the rate of interest on good securities in 

1 A striking case of oppression narrated in the second " Report of the 
New York Tax Commission " in these words serves as an ilhistration of 
this fact : *' The following curious instance of hardship in taxing mort- 
gages actually occurred in one of the counties of central New York 
within the last six years. A worthy farmer and his wife finding them- 
selves becoming incapacitated through age from taking personal care 
of their little farm, sold it for $5000, and allowed the purchase money 
to remain in the form of a mortgage, with the expectation of living on 
the interest paid annually by the purchaser from the profits of the farm. 
The town being very small, the fact of the sale and the consideration be- 
came known to every one, and assessors were compelled, in opposition 
to their usual practice, to tax the old man to the full amount of the 
mortgage, as personal property. But the year in which this was done 
happened to be a year in which the town, anxious to avoid a draft of 
men for the army, to which the old man was not liable, put up the rate 
of taxation to more than the legal rate of interest, in order to provide 
sufficient money to purchase recruits. The result was that the poor old 
man and his wife found that not only was their income from the mort- 
gage swept away by the tax-collector, but they were even obliged to ^o 
out for day's work, in order to pay a balance of taxation and provide 



222 TAX A TION AS IT IS. 

American cities is so low and the tax rate so high that if a 
man paid the taxes legally due from him, his income would 
be far lower in proportion to his means than those who 
make other investments. This fact in itself discloses the 
actual practice with sufficient plainness.-^ 

A man turns over various kinds of investments in his 
mind and balances them against one another in this fash- 
ion : " Real estate yields so much gross ; taxes, repairs, and 
insurance deducted, I have so much net. Money placed 
out on interest will yield, let us say, five per cent., but it is 
practically exempt from taxation. I will, therefore, lend the 
money to A. which he desires." Is it not sufficiently evident 
that the rate of interest on such investments would necessarily 
rise if they were taxed ? 

The vital practical point in the discussion is this : the 

means of support, and this, too, while the identical farm for which the 
mortgage was given was taxed at one-fifth its true value, and other in- 
vestments of other citizens of an invisible and intangible character un- 
doubtedly escaped taxation altogether. And this we call equality in 
taxation!" The report from which this is taken appeared in 1872. 
The event to which reference is made evidently occurred about 1865. 

1 The rate of taxation in the city of Nashville, Tenn., for all pur- 
poses, state and local, was about three per cent, on the value of prop- 
erty fifteen years ago, and it was at that time about four and one-half 
per cent, in Memphis, as I learn from the pamphlet on "The Tax 
Question," by Mr. Enoch Ensley, to which reference has already been 
made. The rate of taxation in New York City was $2.16 on the ^100 
of valuation in 1887. Mayor Hewitt expressed the belief in a recent 
message that it would be $2.18 in 1888. The rate of taxation for state 
and local purposes in Baltimore will be $2.07! on the $100 of valuation 
in 1888. How could money be borrowed for five per cent, were loans 
taxed in these cities? Or even for six per cent.? It is to be further 
noticed that the rate of interest in great cities does not fluctuate with 
the rate of taxation, which it would show some tendency to do, were 
loans actually taxed. 



THE TESTIMONY OF REASON. 223 

benefits of a practical exemption of any sort of floating capi- 
tal are fully diffused among the people only when it is legal. 
A lender in Baltimore is content with good five per cent, 
mortgages, because he knows that they cannot be taxed. If 
they were legally taxable as in other states, he would want 
six where he now takes five. He would say : "Probably the 
mortgage will not be taxed, but it is uncertain, and I must 
have something for the risk I run." Often, indeed, the risk 
is transferred to the borrower by making him agree to pay 
any taxes. The case with other floating, invisible capital, 
difficult of discovery, is similar. So long as it is taxable by 
law, no special inducement is offered to it to come to Mary- 
land, and we nevertheless get little from the tax. If, how- 
ever, we proclaim to the world that certain sorts of floating 
capital are in Maryland not taxable, but that their exemption 
is a part of our tax system, we derive the greatest possible 
amount of gain from an exemption of that which is for the 
most part after all beyond our control, and the benefits of 
the exemption are thus most widely diffused. We remove 
all premium on risk and tell all owners of capital, of the 
specified kinds, that without perjury or dishonesty of any 
kind, they may make investments in the state of Mary- 
land. The competition among lenders must thereby be in- 
creased, and the rate of interest must fall correspondingly. 
We are benefited thereby because we need this species of 
property.^ 

The experience of a village in another state, which came 
v/ithin my knowledge, illustrates the extent to which the rate 

1 I discuss a concrete case, but what is said will be found to be gen- 
erally applicable to American states and cities. Foreign countries like 
England and France are obviously differently situated. Property is 
more readily transferred from state to state of the American Union than 
from one country to another. It has been found in Austria that a 



224 TAX A TION AS IT IS. 

of interest on mortgages is beyond the control of any local 
authorities. The rate of interest was regulated by law, and 
the rate was high enough for money lent on good security, 
provided it was not taxed, and as a rule in the state, it was 
not. It so happened, however, that honest and intelligent 
assessors succeeded in finding personalty in this village, but 
the result was that it became difficult to borrow money, and 
the comparatively poor who wanted loans were more injured 
than the comparatively rich who had money to lend. 

Our experience in Baltimore is instructive. Our present 
diligent tax-collector, on entering office, very properly felt 
that his oath amounted to something, and that he must en- 
force the laws as he found them. He consequently began a 
vigorous search for personal property, to the apparent con- 
sternation of many worthy citizens. It was discovered, 
however, that the returns on capital of that sort, which I 
have described as capital of a high degree of mobility, had 
been adjusted to its practical immunity from taxation, and 
that they were so small that the tax rate was felt as an exces- 
sive load for tax-payers to carry. Dissatisfaction with what 
was regarded as practical injustice was so pronounced that it 
became necessary to announce to tax-payers that those who 
made honest and voluntary returns of personal property of 
this description, would be dealt with fairly ; in other words, 
they would be taxed only on part of their property, the law 
to the contrary notwithstanding. 

This was the best a practical man could do under our tax 
laws. Some money put out at interest or invested in taxable 

small tax on loans has not affected the rate of interest although it was 
collected. Roscher tells of similar experience of other countries. The 
federal government could more advantageously tax money at interest 
and capital of a high degree of mobility than the states, because capital 
will not readily leave the United States in great quantities. 



THE TESTIMONY OF REASON. 22S 

bonds, yielded four per cent., or less, which made the tax 
rate of $1.78! nearly equal to an income tax of forty-five 
per cent. — truly exorbitant ! 

In the " Majority Report of the Maryland Tax Commis- 
sion," one of its members relates the experience of a consci- 
entious client who wished the valuation of his personalty 
increased from $5000 to ^20,000. When told that his book 
accounts were also taxable, he declared that he could not stand 
that, owing to the severity of competition with those not thus 
taxed; and he did not go before the Appeal Tax Court 
until he received assurance that inquiry would not be 
made into his book accounts, in consideration of his con- 
scientious and voluntary discharge of his duty as a citizen. 
Every one will feel instinctively that it was only fair and 
proper for the Appeal Tax Court to act as it did in this 
manner ; that any other course would have been mean as 
well as disadvantageous to the city, in refusing to take what 
they could get. Yet it was not law. This is the point. Do 
we want laws which we cannot enforce, and which, by the 
necessities of the case, educate men to regard an oath, 
calling upon the Almighty to witness its sanctity, as some- 
thing light and trivial ? 

INTERFERENCE OF THE FEDERAL GOVERNMENT IN MATTERS 
CONCERNING LOCAL TAXATION. 

In the second place, we are not independent in matters of 
taxation in Maryland, because we are subject to federal laws, 
over which we, as a state, have no control. Federal evi- 
dences of indebtedness are not taxable by our states, and 
under our existing system it is impossible to avoid their use 
for purposes of evading taxation ; and the facili-ty with which 
they can be used for these purposes is an important element 
in determining their market value. It is difficult to see how 



226 TAXATION AS IT IS. 

the federal government can tolerate local taxation of its evi- 
dences of indebtedness ; for if it does so, a hostile state might 
destroy their value by taxation, and thus by indirect methods 
successfully dispute its sovereignty. At any rate, we have in 
this matter a fact not likely to be changed, and any rational 
system of taxation for an American commonwealth ^vill be 
framed with due reference to federal laws and institutions ; 
and its nature will be such that the exemption of federal 
property from taxation will not enable the cunning and un- 
scrupulous to escape their fair share of state taxation.^ 

Federal interference is, however, not confined to exemp- 
tion from taxation of federal bonds and federal property, 
like post-offices, custom houses, and court houses. Im- 
ported commodities cannot be taxed, and this, with the 
federal internal revenue taxes, makes taxes on commodities 
a practical impossibility in our states. The constitutional 
pro\isions that the state must not interfere with interstate 
commerce, and that contracts are inviolable, aDd the decision 
that charters of private corporations are contracts, have been 
made an excuse for an invasion of state sovereignty in matters 
of taxation, which the most ardent federalist of the last century 
could have hardly desired, or, at any rate, contemplated as 
a possibility. Drummers or agents of commercial houses 
located outside of a state in which they solicit trade, cannot 
be taxed, because, by a recent decision of the Supreme 
Court, that is interfering with interstate commerce. It may 

1 In this country an interstate tax commission has been suggested, in 
order to bring about hannonious tax laws in all our states, and to pre- 
vent both double taxation and escape from taxation. Elsewhere inter- 
national tax legislation has been proposed for the same purpose. The 
prospect of co-operation between states and countries in matters of tax- 
ation is remote, for their interests are too diverse. It is better to adjust 
our schemes of taxation to the facts which exist at present. 



THE TESTIMONY OF REASON. 11*1 

thus happen that residents of a state will be placed at a dis- 
advantage as compared with outsiders. Care is necessary in 
this respect. Prudence must be exercised in taxation of 
railroads, or it will be found that laws taxing them will be 
nuUified by a federal court, on the ground that it involves 
interference with interstate commerce. It is well for a state 
in this matter to follow, as nearly as may be, the laws of a 
state like Wisconsin, which has had experience in the taxing 
of railroads, and which has finally framed its laws in such a 
manner that they cannot be successfully attacked in the 
courts by " tax-fighters." 

Corporate charter exemptions from taxation are held by 
the Supreme Court to be of the nature of an inviolable con- 
tract, and, consequently, forever irrevocable. Thus one 
legislature can forever part with a sovereign power, and cor- 
porations are granted favors which cannot be shown to 
natural persons, both because a natural person dies and a 
privilege would not pass to his heirs, and because a natural 
person is not called into being by a legislative act. 

The interference of federal courts in matters of state and 
local taxation, added to the interference of state courts on 
account of the endless minutiae introduced into our written 
state constitutions, produces a confusion and uncertainty 
most damaging, and leads to ceaseless and wasteful Htigation. 
It is only in the United States that " tax fighting " has become 
a regular branc;h of the legal profession. 

When one studies state and local taxation, it is difficult not 
to become a strict constructionist of the federal constitution, 
just as when one studies other subjects, Hke banking, bank- 
ruptcy, divorce, and marriage, one sees the importance of 
increased federal powers. The truth is, modern industrial 
developments have produced new conditions with which 
our written constitutions do not correspond, and with which 



228 TAXATION AS IT IS. 

they are likely to harmonize less and less every year. Yet 
it is said that it is now practically impossible ever to change 
our federal constitution.^ 

A federal decision which interferes with the otherwise tol- 
erably satisfactory workings of our Maryland system of taxing 
stocks and bonds of corporations, and which leads to a 
practical and unjustifiable immunity of large amounts of 
wealth from taxation, is given in this quotation from the 
"Majority Report of the Maryland Tax Committee " : — 

" We appreciate the force of all that has been said about 
the difficulty of enforcing a tax upon certain classes of per- 
sonal property. We believe that the situation would be very 
much improved in that respect if all the states would adopt 
the Maryland system of collecting taxes on stocks and bonds 
through the corporations which issue them, and would not 

1 So Alexander Johnston in the OM Princeton Revieiu in an article 
on a proposal to call a Federal Constitutional Convention. This was 
not at all the intention of our forefathers who established this govern- 
ment. The " Report of the Proceedings and Debates of the Virginia 
State Convention of 1829-30," with the constitution of Virginia, which 
was drawn up by that body, lies before me. It was said to have been a 
remarkable convention. Chief Justice Marshall and two ex-Presidents, 
Madison and Monroe, were members. The motto on the tide page is 
this sentence from the Virginia Bill of Rights : " No free government 
or the blessing of liberty can be preserved to any people but by a firm 
adherence to justice, moderation, temperance, frugality, and virtue, and 
by frequent recurrence to fundamental principles." ^ The italics are in 
the motto on the title page, and this motto was retained as an article 
in the new constitution. All early writers contemplate a frequent recur- 
rence to fundamental principles for the United States, but the constitu- 
tion has been so drawn that a small minority of the people can keep 
the constitution as it is, and thereby rule a large majority. It is curious 
to notice the growing aversion of monopolists, and those who under 
existing constitutions have received special favors, to any recurrence to 
fundamental principles. 



THE TESTIMONY OF REASON. 11"^ 

attempt to tax such property in the hands of the individual 
holder, and especially if the states would abandon the effort 
to tax such securities in non-resident corporations. Unfor- 
tunately the Supreme Court of the United States has held 
that the state in which a corporation is located cannot col- 
lect from it, out of the interest due to a non-resident holder 
of its bonds, a tax upon such bonds, because the situs of such 
property follows the person of its owner." ^ 

But however this may be, the fact of federal interference 
in state and local affairs must not be overlooked in making 
laws for state and local taxation. 

OUR EXISTING METHODS OF TAXATION NEEDLESSLY DE- 
MORALIZING. 

We must next remark that our system of taxation carries 
with it, as an essential part of its very nature, temptations 
which, to the ordinary man, are irresistible, and thus need- 
lessly demoralizing. A wise people will always endeavor to 
frame institutions so in accord with the facts of human na- 
ture that the temptation to lawlessness may be reduced to 
its lowest terms. " Lead us not into temptation " is as wise 
a prayer for a state or a nation as for an individual. Expe- 
rience shows that the ordinary man wants to do what is right 
in the main, and to discharge his duties to the common- 
wealth, but the ordinary man is not a moral hero. He will 
resist temptation to a certain point, but when the pressure 
becomes too strong he yields. To deny this is to assert that 
environment has no influence on character, and to claim 
that it makes no difference where a child is brought up, 
among thieves and prostitutes in the slums of a city, or 
among wholesome surroundings in an upright and Christian 

1 See R. R. v. Pennsylvania, 15 Wall. 323; Kiittand v. Hotchkiss, 
100 U. S. 491. 



230 TAXATION AS IT IS. 

family ! an absurdity which needs no refutation. Now, 
practical men, in framing laws and political institutions, will 
act with due reference to the facts of human nature. 

There is a tendency on the part of the unthinking to draw 
the conclusion, from the imperfections of human nature, that 
it makes no difference what laws and institutions we have 
until men are improved. This is a mistake. The imperfec- 
tions of man set a limit, beyond which improvement cannot 
go, but we can always legitimately ask the question, Have v/e 
yet reached that limit? The old state banking system, with 
frequent failures and depreciated bank notes of local circu- 
lation, and all its many other iniquities and inconveniences, 
doubtless seemed to our fathers fifty years ago as due to the 
imperfections of individuals ; but we now perceive, that taking 
men as we find them, it is possible to construct a banking 
system devoid of the most glaring of these evils. Thus we 
have likewise witnessed many improvements in administra- 
tive methods, based simply on a proper appreciation of the 
facts of existing human nature. Accounts in state, municipal, 
and federal government are more and more being so kept 
as to remove temptation to wrong-doing, by rendering it 
difficult, and only possible by conspiracy on the part of sev- 
eral ; and the results have been so satisfactory that, in view 
of recent exposures of embezzlement, fraud, and inefficiency 
in private business concerns, a prominent newspaper was 
moved to ask the question, whether it was desirable, after all, 
to introduce business methods into politics ; whether political 
methods might not be better introduced into private busi- 
ness. 

This couplet is frequently repeated : — 

" Whoever hopes a faultless tax to see, 
Hopes what ne'er was, is not, and ne'er shall be." 



THE TESTIMONY OF REASON. 231 

This is true, but it is unwarrantable to draw from this the 
conclusion that existing methods of taxation cannot be im- 
proved. Between the practical workings of various systems 
of taxation in various lands, and in various parts of the same 
land, we observe a wide diversity, and a still wider diversity 
between various taxes in a given system. Some work well, 
comparatively speaking, appeal to the intuitive feelings of 
justice in the community, allow business to proceed without 
obstruction in its natural channels, grow in favor with age, 
and are attended in their administration with little demoral- 
ization, imposing upon tax-payers and tax officials no undue 
temptation to fraud and perjury. Other taxes, on the other 
hand, are a constant source of irritation and annoyance, are 
attended with growing demorahzation and perjury, obstruct 
business, foster monopolies, work injustice as between tax- 
payers, placing upon one the burden of another and failing 
to adjust burdens so as to fall upon each with equal weight, 
and finally some taxes grow in disfavor the longer they last. 
It is our part, then, while discarding Utopian ideas of abso- 
lute perfection, to search dihgently for the relatively best in 
taxation. 

It is further a matter of fact that many of the problems 
which now vex us have elsewhere already found their solu- 
tion. Baron von Reitzenstein, a man of large practical ex- 
perience, and a recognized authority on taxation, in review- 
ing in the '' Archiv fiir das Finanzwesen,^' the report of the 
Baltimore Tax Commission, made in 1886, uses these words : 
" The nature of these proposals discloses a condition of 
things which, in comparison with what exists in most Euro- 
pean states, must be called primitive. They are nearly all 
concerned with questions of policy and of administrative 
methods, which, among us, long ago, found their solution. 
Especially does the provision of the constitution of Mary- 



232 TAXATION AS IT IS. 

land, which prescribes that the only direct tax shall be one 
on the value of all real and personal property, appear as an 
antiquated constitutional enactment. It shows that in this 
matter, Maryland has lagged far behind the general eco- 
nomic development." 

Our present system, then, must be rejected as not answer- 
ing the requirements of practical morality. It is thought 
necessarv^ at every step to re-enforce it with oaths of citi- 
zens and administrative officers, and there is nothing which 
so blunts the conscience as the frequent oaths in our politi- 
cal life. They are rattled off at lightning speed by clerks, 
are taken as a matter of form, and finally lose all sanctity. 
Can a religious person, who thinks the nation under Divine 
government, regard this incessant and careless appeal to 
Deity with indifference ? Can he expect that we will con- 
tinue to be blessed with divine favor, unless we amend our 
conduct in this respect? 

There can scarcely be a doubt in the mind of any, I 
think, in regard to actual facts with respect to oaths. Hon. 
David A. Wells uses the following language on the subject, 
in his report as special tax commissioner to the legisla- 
ture of New York : " Oaths as a matter of restraint or as a 
guarantee of truth in respect to official statements have, in 
a great measure, ceased to be effectual ; or, in other words, 
perjury, direct or constructive, has become so common as 
to almost cease to occasion notice." This is stated to be 
the " all but unanimous testimony of officials who have of 
late had extensive experience in the administration of both 
the national and state revenue laws." It is not difficult tj 
find confirmation of this view. 

The truth-telling habit and truth-loving spirit may be said 
to characterize the American people in a high degree, but it 
is doubtful if an3n;vhere an official oath signifies less. It is 



THE TESTIMONY OF REASON. 233 

because it is so common. In my opinion, oaths should be 
resorted to rarely, and then should be surrounded with such 
solemnity in the methods of administration as to impress 
upon all their true nature. While a resident of Germany I 
was much struck with the fact that oaths were often refused 
when it was supposed that the temptation to perjury was too 
strong, and that in general they were less common there. 
1 believe the effects most salutary. However, I do not pro- 
fess to speak on this matter " as one having authority." 
This is a subject which ought to receive careful attention 
from some experienced and philosophical jurisprudent. 

Our system of taxation tends to bring the morality of the 
community down to the level of its most unscrupulous 
members, and that in this way : No device known to man 
can enable the assessor to get at certain classes of personal 
property in the hands of the cunning and unscrupulous. 
They make false returns, and their neighbors know it ; the 
entire community, in fact, knows that men of large means are 
not bearing their fair share of taxation ; people feel that it is 
an iniquity to place upon them burdens which properly belong 
to others, and so they, too, make inadequate returns, and 
still the voice of conscience with meaningless quibbles. 
The remarks of the West Virginia Tax Commission on this 
point state the case fairly as it presents itself to the average 
man : " All persons will understand that they must compen- 
sate the men who are employed by them to administer the 
affairs of government, and every fair-minded man is very 
willing to contribute his proper share. But it is natural 
that a citizen should be unwilling to pay an amount greater 
than his just proportion ; a man is naturally discontented 
when he feels that he is paying a tax which ought to be paid 
by somebody else ; we are reasonably aggrieved when we 
are forced to carry that part of a load which belongs prop- 



234 TAXATION AS IT IS. 

erly to our neighbors." The truth is, the ordinary man 
simply declares that he will not do it, and thus it is that the 
tax-dodging which begins with the unscrupulous few, extends 
and becomes general. 

Another aspect of this case is presented by the facts of 
competition in business. Those who escape the payment 
of a fair share of business taxes have an advantage in 
business which enables them to undersell their competitors, 
and when a business man sees ruin staring him in the face 
because his dishonest neighbor makes false returns and 
pays taxes on only a fractional part of his property, the 
temptation to do likewise is almost irresistible, except for 
moral heroes, and moral heroism cannot be made the basis 
of governmental action. This fact of sharp competition 
must be kept in mind, and in Maryland we must remember 
that the competition of people outside of IMaryland, espe- 
cially of business men of New York and Philadelphia, is 
keenly felt. We must be careful not to handicap our own 
people in the race of competition. 



PART III. 

TAXATION AS IT SHOULD BE. 



CHAPTER I. 

THE PRINCIPLES ON WHICH A NEW SYSTEM OF 
TAXATION SHOULD BE BASED. 

ONE who would frame a rational system of taxation 
will endeavor to find taxes which cannot well be 
dodged, and will avoid a tax like our personal property tax, 
which is regressive, increasing the relative burden as strength 
to bear it decreases. 

What shall be proposed in view of all these circumstances ? 
We want taxes which have stood the test of experience, and 
which are in accord with the spirit of the times. Taxes of 
this sort must be sustained by obvious principles of common 
sense, and must bear upon all in such manner as to require, 
as nearly as may be, equal sacrifice from each. Equality of 
sacrifice is the aim which we ought to keep before us in the 
construction of a system of taxation. 

This principle is fundamental, and as the nature of taxation 
is generally so little understood, I will quote at some length 
the lucid remarks of John Stuart Mill on this subject : ^ — 

" For what reason ought equality to be the rule in the 
matter of taxation? For the reason that it ought to be so 
in all affairs of government. As a government ought to 
make no distinction of persons or classes in the strength of 
their claims on it, whatever sacrifices it requires from them 
should be made to bear as nearly as possible, with the same 

1 " Principles of Political Economy," by J. S. Mill, Book V., Chapter 
II., section 2. 



238 TAXATION AS IT SHOULD BE. 

pressure upon all, which, it must be observed, is the mode 
by which least sacrifice is occasioned on the whole. If any 
one bears less than his fair share of the burden, some other 
person must suffer more than his share, and the alleviation 
to the one is not, on the average, so great a good to him 
as the increased pressure upon the other is an evil. Equality 
of taxation, therefore, as a maxim of politics, means equality 
of sacrifice. It means apportioning the contribution of each 
person towards the expenses of government, so that he shall 
feel neither more nor less inconvenience from his share of 
the payment than every other person experiences from his. 
This standard, like other standards of perfection, cannot be 
completely realized, but the first object in every practical 
discussion should be to know what perfection is. 

" There are persons, however, who are not content with 
the general principles of justice as a basis to ground a rule 
of finance upon, but must have something, as they think, 
more specifically appropriate to the subject. What best 
pleases them is, to regard the taxes paid by each member 
of the community as an equivalent for value received, in the 
shape of service to himself; and they prefer to rest the jus- 
tice of making each contribute in proportion to his means, 
upon the ground that he who has twice as much property to 
be protected receives, on an accurate calculation, twice as 
much protection, and ought, on the principle of bargain 
and sale, to pay twice as much for it. Since, however, the 
assumption that government exists solely for the protection 
of property is not one to be deliberately adhered to, some 
consistent adherents of the quid pro quo principle go on to 
observe that protection being required for person as well as 
for property, and everybody's person receiving the same 
amount of protection, a poll tax of a fixed sum per head is 
a proper equivalent for this part of the benefits of govern- 



A RATIONAL SYSTEM OF TAXATION. 239 

ment, while the remaining part, protection to property, 
should be paid for in proportion to property. There is in 
this adjustment a false air of nice adaptation, very accept- 
able to some minds. But, in the first place, it is not admis- 
sible that the protection of persons and that of property are 
the sole purposes of government. The ends of government 
are as comprehensive as those of the social union. They 
consist of all the good and all the immunity from evil, which 
the existence of government can be made either directly or 
indirectly to bestow. In the second place, the practice of 
setting definite values on things essentially indefinite, and 
making these a ground of practical conclusions, is peculiarly 
fertile in false views of social questions. It cannot be ad- 
mitted, that to be protected in the ownership of ten times 
as much property, is to be ten times as much protected. 
Neither can it be truly said that the protection of ^looo 
costs the state ten times as much as that of ^loo a year, 
rather than twice as much or exactly as much. The same 
judges, soldiers, sailors, who protect the one protect the 
other ; and the larger income does not necessarily, though 
it may sometimes, require even more policemen. Whether 
the labor and expense of the protection, or the feelings of 
the protected person, or any other definite thing, be made 
the standard, there is no such proportion as the one sup- 
posed, nor any other definable proportion. If we wanted 
to estimate the degrees of benefit which different persons 
derive from the protection of government, we should have to 
consider who would suffer most if that protection was with- 
drawn ; to which question, if any answer could be made, it 
must be, that those would suffer most who were weakest in 
mind and body, either by nature or by position. Indeed, 
such persons would almost infallibly be slaves. If there 
were any justice, therefore, in the theory of justice now 



240 TAXATION AS IT SHOULD BE. 

under consideration, those who are least capable of helping 
or defending themselves, being those to whom the protec- 
tion of the government is the most indispensable, ought to 
pay the greatest share of its price ; the reverse of the true 
idea of distributive justice, which consists not in imitating 
but in redressing the inequalities of nature. Government 
.must be regarded as so pre-eminently a concern of all, that 
to determine who are the most interested in it is of no real 
importance. If a person or class of persons receive so small 
a share of the benefit as makes it necessary to raise the 
question, there is something else than taxation which is 
amiss, and the thing to be done is to remedy the defect, in- 
stead of recognizing it and making it a ground for demand- 
ing less taxes. As in a case of voluntary subscriptions for 
a purpose in which all are interested, all are thought to have 
done their part fairly when each has contributed according 
to his means, that is, has made an equal sacrifice for the 
common object; in like manner, should this be the princi- 
ple of compulsory contributions ; and it is superfluous to 
look for a more ingenious or recondite ground to rest the 
principle upon." 

It may be said, and truthfully, that it is difficult to tell 
exactly what equahty of sacrifice means. It is a subjective 
idea, but we can keep before us as an ideal, equality of sacrifice, 
and approximate to it as nearly as may be. Our notions 
of justice change, but at each moment we should strive to 
attain justice, using such lights as we have. Fair price and 
fair rents are subjective ideas, and yet science, law, and 
theology have dealt with these ideas. Irish land courts 
to-day fix " fair rents." Fairness has reference to needs, to 
customs and traditions, and to all the thousand and one 
circumstances of time and place. It is based on the maxim 
" live and let live." Equahty of sacrifice has reference to 



A RATIONAL SYSTEM OF TAXATION. 241 

legitimate needs of various members and classes of society, 
and all that can be asked of practical legislators is, that they 
should use such moral and intellectual perceptions as they 
have. 

A second established canon of taxation is, that taxation 
should be certain in its amount, in the time of payment, and 
in the manner of payment. Any uncertainty in these par- 
ticulars aggravates the inevitable evils of taxation, and offers 
opportunity for oppression and favoritism on the one hand, 
for corruption on the other. Nothing should without good 
reason be left to the discretion of the tax-assessors or tax- 
gatherers, as the temptation to misuse of power is exces- 
sive.^ 

A third canon of taxation prescribes the convenience of 
the tax-payers as a matter of cardinal importance. The 
burdens of taxation are thus really lightened. One of the 
strongest of all practical arguments in favor of indirect 
taxation is, that the tax- payer is enabled to pay his taxes in 
small sums from time to time in his purchase of commodi- 
ties at his convenience. Direct taxation is so far preferable 
to indirect taxation when considered from the standpoint of 
justice and the pubhc weal, that it should, so far as public 
opinion and public morality will warrant, be substituted for 
it. Direct taxation should therefore be so contrived as to 
incorporate, as far as practicable, the peculiar advantages of 

1 That the Kentucky system vests the sheriffs of the counties with 
almost unlimited power, is one of its defects. It allows sheriffs to use 
their discretion in returning persons as delinquent in the matter of the 
poll tax, the chief source of county revenue, and also gives them author- 
ity to delay the collection of taxes, if they think there is reason therefor. 
By dealing gently with political friends, and severely with opponents, 
and by other devices, an unscrupulous sheriff of a Kentucky county 
could become almost a dictator in his own county. 



242 TAXATION AS IT SHOUID BE. 

indirect taxation. Sufficient attention has never been given 
to this topic. Taxes on landlords should be collected at a 
time when they usually receive their rents, if there is any 
local custom in this respect. Taxes on farmers or planters 
ought to be made payable when they are accustomed to 
receive their annual cash returns on their produce. People 
whose income comes in gradually by the week or month 
will find it much easier to meet their obhgations to the 
public treasury, if allowed to pay their taxes in quarterly 
instalments. 

The last of the classical four canons of taxation concerns 
the economy of administration, and prescribes that taxes 
should take out and keep out of the pockets of the people 
as little as possible over and above what goes into the 
public treasury. Simple as are these four canons of taxa- 
tion, they have always been violated in the past in one or 
more particulars, and the violation has involved an injury to 
the public weal not easily calculable. 

As another fundamental principle I would lay down this, 
that as few things as possible should be taxed, and that in 
the selection of objects for taxation great care should be 
taken to reduce interference with business and professional 
pursuits to a minimum. It is because they interfere with 
business, injure the small man in making a greater capital 
necessary to engage in business, and in raising profits on 
business conducted on a vast scale at the expense of more 
modest establishments, that indirect taxes foster monopolies 
and are so injurious to the masses. It was by their means 
that the monopoly in the manufacture of matches was built 
up in the United States, and that the great bulk of the busi- 
ness of manufacturing tobacco for consumption was concen- 
trated in a few hands. It is further due to indirect taxes 
that it is difficult to import commodities from abroad, 



A RATIONAL SYSTEM OF TAXATION. 243 

except in large quantities, and that this sort of business is 
also concentrated so much as it is. 

To tax as few things as possible must not be understood to 
mean that a single tax like one on incomes or on land- values 
is desirable. Another principle of taxation is that every one 
not a pauper should in some way contribute to the expenses 
of government. This may be called the universality of tax- 
ation. When it is said as few things as possible should be 
taxed, it means that when there is an opportunity to exempt 
any commodity or any species of property from taxation 
without violating any other principle of taxation, it is a great 
gain to do so. It has been found, for example, that apart from 
any considerations respecting the desirability of protectionism, 
revenues from imported commodities can as well and as 
fairly be raised on a dozen articles as on a hundred dozen. 
This simplifies 'administration wonderfully, and reduces the 
interference of government in private affairs in a most de- 
sirable manner. 

The effects of taxation on industry must be carefully 
considered, for current industry is the source of taxes. If 
current industry is injured materially by taxation, the impov- 
erishment of the people will be the result. Suppose all taxes 
should be removed from land and placed on improvements. 
It would enable people to hold land indefinitely for specula- 
tive purposes and would retard improvements. Suppose, 
now, all taxes removed from improvements, and placed on 
unimproved land. It would certainly stimulate industry, 
even if it is not desirable to adopt this measure on other ac- 
counts. 

The movements of property and the principles underlying 
them must be understood by the tax legislator. This is 
closely connected with what precedes. A street-car pro- 
jector visited a neighboring city of some eighty thousand 



244 TAXATION AS IT SHOULD BE. 

inhabitants, obtained a street- car franchise which has 
proved a bonanza, and when the municipal council pro- 
posed certain conditions of the grant, he feigned anger, and 
said, " We will go elsewhere and invest our money, if we 
are hampered by such conditions." Of course he lied ; but 
the council understood so little about the nature of the busi- 
ness committed to them that they were bulldozed — to 
use a Southern phrase for this Southern council. They 
should have known that there are few valuable street-car 
franchises, that one is valuable only in a city, that these 
franchises are eagerly sought, and that if duly advertised, 
they can be sold for a handsome percentage of gross reve- 
nues, to the relief of tax-payers. Last winter the railroads of 
Maryland actually resisted the proposals of the Tax Com- 
mission to compel them to pay as large an amount of taxes 
in proportion to their property as private individuals, on the 
ground that they would thereby be driven from the state ! 
Their capital is fixed and specialized, and if it should be 
taxed so that it would yield only two per cent., that would 
still be better than nothing. Railroads may try to frighten 
a community, but they cannot run away. Of course this is 
no reason why they should pay more taxes than justice 
requires ; it is a reason why the Maryland legislature should 
not have allowed itself to be bulldozed. 

One tax ought not to be considered by itself, but all the 
taxes, our federal, state, county, and local taxes, must be con- 
sidered as forming one system of taxation, and the aim of the 
legislature should be so to adjust the burdens of taxation that 
each one may pay a fair share of all the taxes to which he 
is liable. Federal taxes, for example, bear with undue sever- 
ity on the poorer and middle classes, and as we are Ameri- 
can citizens as well as citizens of our various common- 
wealths^ and as states are not independent in matters of 



A RATIONAL SYSTEM OF TAXATION. 245 

taxation, it is but fair that state and local taxes should aim 
to lighten the burdens of the poorer and the middle classes 
somewhat, as compared with the wealthier classes. This is 
ample justification of an exemption of $600 from an income 
tax, or an exemption of a certain amount of personal prop- 
erty, as for example the exemption of ^1000 worth of per- 
sonal property, as in the new Tennessee tax laws, dated 
March 26, 1887. 

It is not extremely difficult to frame a system of taxation 
for American states and their cities, and the other political 
units into which they are subdivided, if the various princi- 
ples which have been elaborated be kept in mind. 



CHAPTER II. 

TAXATION OF REAL ESTATE. 

THE basis of every system of taxation must be the tax- 
ation of real estate, and that for several obvious 
reasons : First, in all ages past, real estate has been the 
chief source of wealth, and great fortunes and special privi- 
leges have been derived from its possession. The founda- 
tion of an aristocratic class has ever been large landed pos- 
sessions. Land and its improvements have then been the 
chief part of all historical systems of taxation, because, until 
a comparatively recent period, there has been little else 
to tax.i 

The taxation of land has, then, become part and parcel of 
the legal and economic traditions of all modem nations, and 
we have adjusted ourselves to this fact. 

It has been said by a French writer, with whom the 
founders of this republic were not entirely unfamiliar — 
Canard, I mean — that " every old tax is a good tax, and 
every new tax is a bad one." The kernel of truth in this 
highly exaggerated principle will be found specially appli- 
cable to the taxation of land. 

When the tax on the value of land is hable to compara- 

1 " During the greater part of the world's history the rent of land 
has been the chief source of saving. A good deal is saved from rent 
in England now, and in the rest of the world probably more is saved 
from it than from profits on capital." — MarshalVs Economics of In- 
dustry, page 39. 



TAXATION OF REAL ESTATE. 247 

tively slight variation, and is something which can be cal- 
culated upon as a fixed and unalterable fact, it partakes of 
the nature of a charge upon the land, and to this extent it 
may be said to amount simply to partial public ownership. 
A farmer owns, let us say, one hundred acres of ground pur- 
chased for $10,000, but a mortgage for $5000 rests on it 
because he was able to pay only one-half of the purchase- 
money. He feels the burden of taxation and groans under 
it, yet he should reflect that he would be no better off if 
his land had never been taxed, for in that case he would 
have been obliged to pay so much more for it, and instead 
of being $5000 in debt, he would owe perhaps $7000. I 
recently purchased a house, and in deciding how much I 
was willing to pay, I took into consideration the taxes. If 
the house had been exempt from taxation, I would have 
been asked more for it, and would have been willing to give 
proportionately more. How, then, can I say that I am 
really bearing any burden at all ? I simply pay the public 
annually for its claim on my property, and if this claim 
should be released,^ it would be equivalent to a present to 
me. Of course, if the rate of taxation is raised, it amounts 
to this, that the claim on my property is raised and the 
value of the part owned by the public increases. The more 
invariable and permanent taxes are, the larger the extent to 
which the above principle can be applied.-^ 

Other forms of wealth, which we call personal, have in- 
creased very rapidly during the past fifty years, but real 
estate constitutes so considerable a portion of all property 
that it is out of question to think of framing a tax system 
without making the land tax the basis of it all. The farmer 
must remember that his real estate alone is not involved, 

1 This is applicable to the land itself, but only to a less extent to the 
improvements on the land. 



248 TAXATION AS IT SHOULD BE. 

but also city real estate, which is increasing in value with 
such enormous rapidity, and making so many rich without 
labor. 

Apart from this, land is visible, easily valued, and perma- 
nent in its location, and these qualities render it specially 
suitable for taxation. The following reasons have also been 
given for a tax on real estate, more particularly on land : 
Land derives an increased value from pubhc security and 
from public works, and taxes are expended chiefly for these 
two purposes. This is so true with reference to public 
improvements that many of our growing cities have become 
embarrassed by expenditures made at the solicitation of land- 
owners, particularly on occasion of "booms," and not, as 
popularly imagined, by the moneyless rabble. An instance 
recently occurred in Buffalo, where large expenditures were 
forced upon the people by real estate owners, and against 
the protest of at least some of the workingmen. A second 
reason is that the tax may be considered as a return to the 
community for the rights which it has surrendered in what 
was once common property. 

All assessors should be by law especially directed to 
assess to the last dollar of its true value all real estate held 
for speculative purposes. There is a common and iniquitous 
practice, which I observed everywhere in my investigations, 
of undervaluing land held for a rise, and not used at all, or 
used only for some unnatural purpose, as when city lots are 
utilized as cow-pastures. Such land is occasionally actually 
valued as farm land. Thus men, without a stroke of work, 
and even while obstructing the natural growth of cities, see 
their property steadily increase in value, and this is solely 
due to the industry and thrift of their fellows. An aggra- 
vated case of this sort was reported to me as existing in 
Cleveland, and I was told that the assessed value of land was 



TAXATION OF REAL ESTATE. 249 

increased in Savannah, Georgia, the moment it was improved. 
Much of the property in that city appears to be assessed at 
sixty per cent, of its actual selHng value, but unimproved 
property is assessed for a smaller relative amount, and thus 
a premium put on speculation. One gentleman told me 
that four lots which had recently been sold for ^4200 were 
assessed for only $1100, and that a lot next to one he had 
improved was assessed for only ^1300, whereas it could not 
be bought for less than $3500. This gentleman had bought 
a lot for $900 of the city. Its valuation for taxation was 
shortly increased to ^1500, and as soon as he put up a 
house on it, the valuation of the lot was raised to ^1900. 
Such practices appear to discourage improvements, and in- 
stances are reported where farmers would improve farms 
and houses were it not that they fear an increased assess- 
ment. Taxation should be so administered as not to appear 
to be a penalty for improvements and a discouragement to 
the enterprising. To exempt improvements from taxation 
for a period of three years is not without precedent, and an 
exemption for a period of two or three years, say until the 
third tax levy from the beginning of the improvement, is a 
measure to be decidedly recommended.-^ 

1 A bill passed the recent legislature of Maryland for the extension 
of the boundaries of the city of Baltimore for two miles north, east, and 
west. The bill provides that the present low assessments of the " Belt " 
— the part it is proposed to include within the city — shall not be in- 
creased until the year 1 900; also that the present tax rate, less than 
one-half that of the city, shall not be raised until that time. Although 
personally I will benefit by this provision, in case of annexation, it 
hardly seems to me right. It will give land-owners great opportunities. 
It may be said in its justification that it was necessary, in order to 
induce the people in the " Belt " to vote for annexation. A worse pro- 
vision in the interest of the holders of large tracts of land is that even 
after 1900 the present rate of taxation "shall not be increased for city 



250 TAXATION AS IT SHOULD BE. 

purposes on any landed property within the said territory until avenues, 
streets, or alleys shaU have been opened and constructed through the 
same, nor until there shall be upon every block of ground so to be 
formed, at least six buildings or storehouses ready for occupation." 
This gives owners of large estates opportunities to withhold the same 
from the market for speculative purposes as long as they please, and to 
grow wealthy without exertion. The practical man will say that city 
extension is important, and that this concession helps to secure it. 
Nevertheless, no permanent exemption from public burdens ever yet 
failed to produce harm, and it will not probably be different in this case. 
It would not have been so bad had any limit whatever, as 19 lo or 1920, 
been set to exemption from common municipal burdens. This is not 
to be understood as an argument against annexation, because annexa- 
tion from every standpoint is the lesser of the two e\-ils, and in many 
respects the plan of annexation is worthy only of commendation. 



CHAPTER III. 

EXEMPTION OF REAL ESTATE FROM STATE 
TAXATION. 

ADMINISTRATIVE REASONS FOR THIS EXEMPTION. 

THE second feature of my scheme of taxation is the 
exemption of real estate from all state taxes, and for 
this exemption there are several cogent reasons, all based on 
actual experience of states and counties situated in this 
respect much as Maryland is. 

We have in the first place to observe the difficulties which 
everywhere attend the assessment of real estate for state pur- 
poses. It cannot be assessed by a single board of assessors, 
for the area is too vast. Its assessment must be committed 
to local authorities, and sooner or later a rivalry breaks out 
between them in the undervaluation of real property, each lo- 
cality striving to reduce its share of state taxes at the expense 
of other parts of the state. This struggle results in inequality 
and injustice, for real estate will be assessed twice, three 
times, or even four times as high in one part of the state as 
in another. Reference has been made to this matter in 
Ohio, and I know of no state in the Union where such ine- 
quaUties do not exist. If the opinion of the other members 
of the Maryland Tax Commission — and they are better qual- 
ified to form one than I — is entirely correct, that these in- 
equalities as between the various counties of Maryland are 
not wilful, the fruit of design and cupidity, the fact of the 
inequalities is not thereby altered ; and there is no reason 
to suppose that we in Maryland can hope to escape perma' 



252 TAXATION AS IT SHOULD BE. 

nently the experience of other states, if we follow their 
methods. 

An attempt to remedy this evil has frequently been made 
and the favorite device is a state board of equalization, with 
power to raise or lower the valuation of any county. Per- 
haps the best constructed board of equahzation is found in 
New York, where three of its members are traveling state 
assessors, who endeavor by personal inspection to arrive at 
just conclusions, and to make each county pay its propei 
share of taxes. After all, at its best, a board of equalization 
is a bungling affair, and never performs its work satisfactorily, 
The best such boards can ever do is shrewd guess-work, as 
their task transcends human powers. 

As a matter of fact, there is, however, comparatively little 
difficulty in the valuation of the various pieces of real prop- 
erty within a county, and there is no reason in the nature of 
things why all should not be assessed and taxed at an ap- 
proximately uniform valuation; provided, you have the 
proper kind of administrative machinery, and new valua- 
tions at least as often as once in three years. The reason 
for the difference between county and state, in this respect, 
is obvious. The valuation of all real property within a 
county may be placed under one supervision, and by fre- 
quent meetings of the various assessors in the office of their 
chief, and comparison of methods and results, with the right 
of any tax-payer to be heard before the board of assessors, 
and with the right of appeal in certain cases, it is possible to 
assess each one at about the same rate, so that if one piece 
of property is assessed at fifty per cent, of its true value, all 
other property within the county may hkewise be assessed at 
fifty per cent, of its true value. The only proper method is 
manifestly to assess property at its true selling value in open 
market, but not at forced sale ; but if one piece of property is 



EXEMPTION OF REAL ESTATE. 253 

assessed below its true value, all other property ought to be 
assessed below its true value in the same proportion, and so 
long as there is no state tax on realty, it makes comparatively 
little difference. If the assessed valuation is low, the rate 
must be correspondingly higher. On the other hand, if 
valuation is raised, the rate may be lowered, as actually hap- 
pened in Baltimore in 1836, when the assessed valuation of 
all property was raised from $3,787,762 to $42,931,960, and 
the rate was lowered from $4.77^ per $100 to $o.66|-. 

All the immense and increasing difficulty which boards of 
equalization encounter is obviated by dropping the tax on 
real property for state purposes, and the burdens resting on 
realty are thereby lightened.^ 

A FURTHER REASON FOR SEPARATING THE SOURCES OF STATE 
REVENUE FROM THE SOURCES OF LOCAL REVENUE. 

Another reason why it is well to separate the source of 
state revenue from the source of local revenue and reserve 
real estate for local purposes, is that the expenses of the 
local political units are increasing more rapidly than the 
expenses of central state governments. We hear much 

1 The above was written before I saw the " Report of the Illinois Rev- 
enue Commission," made in 1886. The commission, in speaking of 
undervaluations and consequent inequalities, says : " It did not seem 
possible to suggest any remedy for this system of undervaluations, unless 
some method of divorcing the collection of the state and local revenues 
could be devised. Without such a divorcement, no provision of the 
law, however stringent, and no penalties, which would be possible or 
desirable as sanctions of the law, would produce the desired result. 
Hence, this separation of the state and local taxes became a fundamen- 
tal proposition with the commission, and the revenue system herewith 
submitted for consideration is constructed on that theory." The com- 
mission abandons the equalization of real property, and recommends, 
as I have done, the taxation of real estate for local purposes exclusively. 



254 TAXATION AS IT SHOULD BE. 

about centralization in these days, and when a few, often 
from unprincipled motives, start a cry of alarm like this, 
the mass of men join in it thoughtlessly, just as all the 
sheep of a flock jump over an imaginary obstruction be- 
cause the bell-wether has been foolish enough to set the 
example. 

The truth is, the functions of the local subdivisions of 
the states have for years increased more rapidly than those 
of the states, and this has naturally been accomplished by 
more rapid increase of local than state expenses. Paving 
and lighting of streets must be done better than formerly, 
charities are expanded, measures for the prevention of 
disease by boards of health with large powers, and other 
sanitary municipal provisions, are in their present magni- 
tude comparatively new ; public parks and other arrange- 
ments for recreation and beautification entail enormous 
expenditures, and the origin of our expensive free public 
school systems is within the memory of the living. Citi- 
zens do many things through the agency of municipal co- 
operation which they did formerly individually — each man 
for himself. The old German maxim was " Jederman 
fege vor seiner Thur " — "each one sweep before his own 
door." This antiquated and wasteful method of street clean- 
ing has been nearly everywhere abandoned, and streets are 
cleaned by cities. The old custom is retained in Baltimore. 
Every one sweeps street and sidewalk in Baltimore to the 
middle of the street, and also waters the street in front of his 
owTi house. This often necessitates an extra servant, and re- 
quires probably twenty times the labor of modern methods. 
Sweeping snow from sidewalks is another example. This 
movement is not something merely national, but it is world- 
wide and inevitable. There is every reason for the careful 
observ^er of the drift of things to expect a continuance of 



EXEMPTION OF REAL ESTATE. 255 

this movement.^ To take a single item : public school ex- 
penditures are likely to increase enormously and ought to 
increase enormously. Changes in industry have rendered 
the old-fashioned apprenticeship system antiquated, an insti- 
tution burdensome alike to employer and employ^, and as 
things actually are, of comparatively little use. More and 
more must the masses look to the school for preparation for 
actual life, and it is to be hoped that many of us will hve to 
see the time when industrial training will be introduced in 
all our schools, and rendered compulsory, so that every boy 
and every girl may gain a knowledge of useful arts. This 
will in the end be highly remunerative, for the true wealth 
of a country resides in its men and women. Can any one 
doubt that the immense wealth of a city like Boston is 
devoid of connection with its large expenditures for pubhc 
schools? When our people understand this they will de- 
mand that teachers' present pitiably small salaries be raised 
so that the occupation of a teacher may rank with any pro- 
fession, and that school facilities be extended. It is safe to 
say that we in Maryland ought to spend twice what we do 
for schools, and that the wealth, and consequently the tax- 
able basis of Maryland, would thereby be increased, and 
render the expenditure most profitable. 

It is probable that increase in expenditures of government 
gives us as good a measure of increase of functions as any 
we have. Wars have produced complications in federal 

1 Uninformed persons identify extension of government functions 
and centralization. While Prussia was acquiring the private railroads, 
newspaper writers had much to say about the increased centralization 
of power in Prussia. The truth is, one of the most important move- 
ments in the domestic policy of Prussia, during the past fifteen 
years, has been an increasing decentralization of administration, and 
this has not been interrupted by the acquisition of private railroads. 



256 TAXATION AS IT SHOULD BE. 

expenditures ; and to measure the increase of functions it 
may be better to compare expenditures on account of the 
entire civil estabhshment at one period with those expendi- 
tures at another than to compare all the federal expenditures 
at one time with those same expenditures at another. 

A few statistics will bring before the reader vividly the 
nature of this world-wide movement. It is said that the 
best governed great city in the world is Berlin, and it is 
certain that even the breath of suspicion has never touched 
the integrity of its administration. Nevertheless, while 
population doubled from 1861 to 1876, expenditures in- 
creased fourfold. The expenditures of Paris increased from 
7,500,000 francs in 1799 to 253,663,340 francs in 1883, 
and the per capita expenditure over six-fold. While the 
expenses of the state of Baden increased about 41 per 
cent, from i860 to 1871, the expenditures of the local 
political units, called Ge7neinden, increased 81 per cent. 
In Prussia, while the state expenses from 1849 to 1867 
increased a little over 25 per cent., the expenses of the 
local political units increased over 130 per cent. These 
illustrations might be extended indefinitely, but it is need- 
less. In the United States there is some evidence that both 
extremes — the local political units and the federal govern- 
ment — are increasing in importance, while the significance 
of the states is dwindhng. In New York state between 1862 
and 1866 the state tax increased 168 per cent, the county 
tax 208 per cent., and the town tax 350 per cent. 

The following tables present a few facts relative to the 
increase of federal, state, and local expenditures in the 
United States. It has been impossible, in a few cases, to 
discover whether the same items of expenditure are com- 
mon to the budgets of a given state at the different periods 
given, but care has been taken in their analysis, and it is 



EXEMPTION OF REAL ESTATE. 



isn 



thought that the results are approximately correct, and indi- 
cate in a rough way the comparative increase. If there is 
error, it is probably in the exclusion from earlier budgets of 
what is included in the later. Those states only are cited 
for which returns for the period covered could be had. 
The years 1828, 1844, i860, and 1887 have been selected 
for the reason that complete returns could not be found for 
other years at equal or nearly equal intervals.^ 

FEDERAL EXPENDITURE. 









NET ORDINARY 






TOTAL EXPENDITURE 


TOTAL EXPENDITURE, 


- YEAR. 


ESTABLISHMENT. 


LESS INTEREST 
ON THE DEBT. 


INCLUDING 

INTEREST, BUT NOT 

BOND PURCHASES. 


1828 


^3.676,053 


^13,296,041 


^16,394,842 


1844 


5.645.184 


20,650,108 


22,483,560 


1860 


27,977.978 


60,056,754 


63,200,875 


1887 


85,264,825 


220,190,603 


267,932,180 



STATE EXPENDITURES. 



STATE. 


1838 


1844 


1860 


1887 


Connecticut . . 


^i47."7 


;^2o8,947 


^723,855 


^1,511,697 


Georgia .... 


186,929 


267,764 


1,179,100 


4,453.293 


Maine .... 


137.351 


363,058 


394,008 


1.245,015 


Maryland . . . 


268,872 


635.524 


1,306,643 


2,125,110 


Massachusetts 


447.769 


461,097 


1.303,784 


9.317.609 


New Hampshire . 


80,890 


138,855 


184,445 


951,782 


New York . . . 


1,988,804 


3,200,000 


14,148,667 


15,829,125 


Pennsylvania . . 


3.107,552 


3.882,398 


3.637.147 


7,262,805 


Vermont . . . 


51,682 


90,054 


230,489 


380,646 


Virginia . . . 




1,526,358 


4,222,531 


2,626,713 



1 These statistics have been compiled chiefly from reports of the 
finances of the states, etc., given in the American Almanac. 



258 TAXATION AS IT SHOULD BE. 

From the above tables it will be seen that the expendi- 
tures in 1887 were larger than those of 1828, approximately 
as follows : — 

The federal expenditure for civil establishment was 23 times as great. 

" " " less interest on the debt " 16 " " " 

" total federal expenditure 16 " " " 

The expenditure of Connecticut was 10 " " " 

" " " Georgia 1 " 23 " " " 

" " " " deducting debt payment, 



about 


8 


" Maine was 


9 


" Maryland " 


8 


" Massachusetts " 


21 


" New Hampshire '* 


12 


" New York 


8 


" Pennsylvania " 


2 


" Vermont " 


7 


" Virginia 2 


2 



The total expenditure of the above states in 1887 was 
about ten times as great as in 1828. The table given in- 
cludes, in nearly all cases, expenditures on account of debts 
and schools. 

The ordinary expenses of states, exclusive of debts and 
schools, did not increase, on the whole, to any considerable 
extent during the period between 1840 and i860 ; for while 
the expenditures of some states increased to nearly double 
the amount in 1840, those of others were diminished in like 
proportion. These are the only years for which the figures 
are accessible, but it is believed that even up to the present 
time the increase has been comparatively small. 

The following table gives a comparison between the 

1 The exceptional increase of Georgia is due to a large debt pay- 
ment in 1886-87. The amount paid was about ^3,000,000. 

2 Compared with 1844. 



EXEMPTION OF REAL ESTATE. 259 

federal expenditures and the expenditures of the states 
enumerated in Chapter 11. of Part 11. , in 1796, with the 
expenditures of the same in 1887, and also between the 
federal expenditures and those of all the states in the same 
years : — 

1796 1887 

Federal expenditure j?5, 790,651 ^267,932,180 

Expenditure for civil government in 

states named 1,000,000 65,000,000^ 

Federal expenditure 5,790,651 267,932,180 

Expenditure of all the states . . . . 1,000,000 101,534,5231 

The total expenditure of the various states has increased 
between the years 1878 and 1887, ^25,460,229 (the expend- 
iture in 1878 being $76,074,294 ; in 1887, $101,534,523), or 
about 2i2i\ P^r cent., while during the same period the federal 
expenditure for civil establishment has increased 60 per cent., 
the total federal expenditure less the interest on the debt 60 
per cent., and the total federal expenditure 13 per cent. In 
this same time the taxes levied have grown from $50,000,000 
to $65,000,000. 

While the state taxes in Ohio from 1826 to 1886 increased 
about forty-six times, and the taxes for local purposes over 
a hundred times, the federal receipts increased only thirteen 
times. 

1 It is thought the receipts from taxes in 1887 might more fairly be 
compared with expenditure for civil government in 1796, as expressing 
more nearly the ordinary expenses of government, for the reason that 
expenditures on account of debt and schools were largely met by re- 
ceipts from funds, and hence not included in ordinary expenses of civil 
government. This is also true at present, but in most cases the total 
expenditures for all purposes only have been found, the amount ex- 
pended for ordinary purposes not being given separately. The total 
receipts in 1887 from taxation in the fifteen states referred to, were 
about ^30,000,000 ; in all the states about ^65,000,000. 



260 



TAXATION AS IT SHOUID BE. 



In New York state, between the years 1827 and 1887, the 
local taxes increased fourteen times, while the total state 
revenues increased but seven times, the total federal reve- 
nues having increased about fourteen times. Between the 
years 1846 and 1887, the town and county and school taxes 
increased about thirteen times, the state taxes fourteen times, 
and the federal about twelve times ; between 1868 and 1887 
the state taxes have decreased nearly one-half, the to\\m, 
county, and school have increased about one-half, and the 
federal decreased a very little. 

It is noteworthy that the Maryland legislature of 1888 
reduced the rate of state taxation one cent on the $1.00, or 
from i8| cents to 17I, while the ways and means com- 
mittee of the Baltimore city council has reported in favor 
of increasing the city rate of taxation, for 1888, thirty cents 
on the ^i.oo, or from $1.60 to ^1.90. The only purposes 
for which a property tax in Maryland is levied are schools 
and debt payment, and the debt is gradually disappearing. 

This table exhibits the proportion of the aggregate 
amount of taxes levied by state, county, or school dis- 
trict authority : ^ — 



GEOGRAPHICAL DIVISIONS. 


STATE. 


COUNTY. 


MUNICI- 
PALITIES. 


SCHOOL 
DISTRICTS. 


AGGRE- 
GATE. 


The United States . 


16.66 


22.25 


48.60 


12.49 


100 


New England States 
Middle States . . . 
Southern States . . 
Western States . . 
Territories .... 


10. 1 I 
II.8I 
36.61 
16.68 
23.40 


4-99 
14.64 

35-58 
29.11 
65.29 


82.68 
62.47 
24.92 

34-35 
5-33 


2.22 
11.08 

2.89 
19.86 

5.98 


100 
100 
100 
100 
100 



1 Taken from Tenth Census Report, Volume VII. 



EXEMPTION OF REAL ESTATE. 261 

The older and more highly developed parts of the country 
clearly exhibited relatively smallest expenditures for state 
purposes, and relatively the largest for local purposes.^ 
Without going into the matter further, it must be sufficiently 
evident that a rational system of taxation, framed with a view 
to future developments, will be chiefly solicitous about the 
wants of the local political units, and I therefore recommend, 
in consideration of these facts and other facts already men- 
tioned, that real estate be exempted from all taxation for 
state purposes. So far as I am able to judge, this recom- 
mendation harmonizes with the conclusions of the ablest 
students of finance, and is in keeping with a tendency al- 
ready evident in the United States. 

Delaware, Pennsylvania, and Vermont levy no state tax on 
real estate, while Wisconsin, and other states following her 
method of taxing railroads, either exempt real estate from 
taxation for state purposes, or contemplate such action in 
the near future. 

There have been so many complicated factors at work 
that it is with some difficulty that the meaning of American 
budgets can be understood. Our civil war was an extraor- 
dinary occurrence, and we may hope that national finances 
will not again be disturbed by any similar disaster. It 
seems to me, as already remarked, that the expenses of 
civil estabhshment are the truest measure of increase 
of functions of the national government. The war pro- 
duced considerable disturbance in state and local financier- 
ing also. Formerly, hastily undertaken works of internal 
improvement produced financial embarrassment, usually 

1 Of course the different forms of political organization are con- 
cerned with this. The Southern county has always been important, but 
it has not contained important subdivisions. As the South develops, 
local government must become more important. 



262 TAXATION AS IT SHOULD BE. 

temporary ; but some of the states have more to show for 
their undertakings than is generally supposed. The Erie 
Canal, in New York state, has paid for itself many times over. 
The rent of a single railroad in Georgia defrays a considerable 
portion of the state expenses. Other facts have been already 
mentioned, and still others will be found in Part IV. of this 
work. After state undertakings had generally been aban- 
doned, what may be called a mixed system, a combination 
of public and private undertakings, was taken up. This com- 
bined some of the worst features of public and private under- 
takings, and skilfully evaded many of the best features of each 
kind of enterprise. States and local political units, as well 
as federal government, began to pay for railroads, which 
were then given as a present, without adequate reserved 
rights to private corporations.-^ This also produced disturb- 
ance, and nearly led to repudiation in Maryland. All these 
facts must be carefully kept in mind ; but, notwithstanding 
the confusion they produce, one fact stands out clear and 
incontrovertible. The functions and expenditures of local 
government have increased the world over, more rapidly than 
those of central governments, more rapidly in the United 
States than either state or federal government. It seems 
probable that the functions of the federal government are 
increasing more rapidly than the functions of states, that 
states are becoming relatively insignificant. When states 
are first organized, their expenses are apt to increase rapidly 
for a time, and then to become almost stationary, and in 
some instances they have really decreased. A wiser policy 

1 The gifts to the Illinois Central Railroad more than covered the 
entire expense of its construction. The United States built the Pacific 
Railroads, and handed them over as a free gift, to men who have ac- 
quired enormous wealth from this bounty. See James on " Railway 
Question." Economic Association monograph. Volume II., No. 3. 



EXEMPTION OF REAL ESTATE. 263 

may hereafter restore our states to a more important posi- 
tion in American life. It is eminently to be desired from 
every standpoint.^ The states have surrendered a large 
portion of their functions to private corporations, and subject 
to interference in domestic concerns by federal courts, they 
sink into an unworthy, undignified position, offering no field 
for honorable pubHc service on the part of patriots. Private 
corporations offer, perhaps, the largest inducement to talent, 
but the federal service is not entirely without attractions, 
while it now does not seem improbable that the position of 
mayor of a great city will soon be a more enviable office 
than that of governor of an American commonwealth. 

While the states at present cannot perform a great deal 
for society, they have retained vexatious, and in many cases 
most injurious rights of interference in local affairs, and 
local government can with us in America do very little with- 
out express legislative sanction. We talk a great deal about 
local self-government, but, as far as finance is concerned, 
the thing itself scarcely exists. We do not begin to have 
the power of local self-help which the well-governed Ger- 
man cities have. One reason for favoring the separation of 
sources of state and local revenues is to limit the interfer- 
ence of legislatures in local affairs, so fruitful of corruption, 
and to enlarge the province and to increase the independ- 
ence of local self-government. 

1 One of the measures recommended by Prof. Henry C. Adams, for 
this purpose, is the restoration of the borrowing powers of the states. 
See his " Public Debts," Part III., Chapter IV. 



CHAPTER IV. 

A PLAN WHEREBY A PART OF THE INCREASING 
VALUE OF REAL ESTATE IN STATES AND CITIES 
MAY BE SECURED BY THE PUBLIC. 

A CUSTOM which obtains in Savannah is suggestive. 
It appears that the city is extended only after all or 
a considerable portion of the land in the proposed new part 
has been acquired by the city. This is bought by the acre, 
as it manifestly cannot be sold as lots until it has been laid 
out. After improvements have been made, the land is sold 
in lots at auction, and the city realizes a profit on the trans- 
action, which accrues to the benefit of the tax-payers. Lots 
were formerly sold, and only interest on the amount bid was 
required ; in other w^ords, unalterable but redeemable ground 
rents for the city were established, and to-day the owners of 
some of the most valuable lots in the city, sold long ago, 
pay $20 to $30 a year into the municipal treasury.^ 

There are some evident defects in the plan. Ground 
rents for twenty-five years, with power to revise them at the 
expiration of the period, or to put these lots up at auction, 
the purchaser to acquire improvements at an appraised val- 
uation, would have saved for the community the increment 
in value due to the diligence and thrift of the community. 

1 Lots belonging to the city on North Calvert Street, in Baltimore, 
were advertised for sale at public auction recently, the purchaser to 
make semi-annual payments to the city; in other words, to pay for the 
use of the land. The city did not retain the right to revise the rent at 
the expiration of a given period. 



A PRACTICABLE PL AM. 265 

This is an easy and practicable plan, and in many cities, if it 
had been applied at a sufficiently early date, would have 
obviated the necessity of taxation, and thus have given an 
immense impetus to commerce and manufactures. The 
diminution in the number of the idle classes would be a 
benefit, and the fewer opportunities for speculation would 
turn more to the old-fashioned methods of getting a living 
by hard work. 

The details of the plan are easily understood, and it is 
not difficult to carry it out. Toronto, in Canada, owns land 
on which improvements have been constructed, and derives 
a considerable income therefrom. The amount received 
from rentals of city property in 1885 amounted to ^56,- 
306.04. 

This is a plan which Columbia College and private par- 
ties pursue, although with some deviation in details. It is 
customary to lease city lots for twenty-five years, more or 
less, at the expiration of which period the owner of the land 
fixes a new rental. The owner of the improvements has 
then an option. He can pay the rental for another period, 
or he can surrender his improvements to the land-owner, who 
must then purchase them at an appraised valuation. This 
is rather too complicated for an American city. The plan 
which a college in Chestertown, Kent County, Maryland, pur- 
sues is open to no objection. It leases land to parties, and at 
the expiration of the lease puts it up at auction. If the pre- 
vious lessee bids in the lease, he, of course, is not obliged to 
pay for the improvements. If some one else offers more 
for the use of the property, the other person must buy the 
improvements at an appraised valuation. If this plan is 
pursued by states and cities, it remains for two private par- 
ties to settle between themselves the value of the improve- 
ments, and there is no opportunity for fraud ; nothing could 



266 TAXATION AS IT SHOULD BE. 

be easier, and it would encourage improvement rather than 
otherwise. We of Baltimore have a private ground rent 
system, which, it is said, has done more than anything else 
to encourage building and the owTiership of houses even by 
poor people. The land is not bought, but it is agreed for 
all time to pay a certain definite sum for its use. This 
raises up an idle class, and diverts men from industry, and 
on this account its advantages are a subject of controversy. 
The objections which are urged against it would nearly all 
disappear, did the benefit of the ground rents accrue to the 
city. It is easier to get a home, because one is not obliged 
to buy the ground, and the ground rent is unlike a mortgage 
because the owner of the improvements can never be dis- 
turbed so long as he pays his ground rent. 

It is to be recommended that states and cities both make 
use of this suggestion. It is to be recommended that legis- 
latures pass laws, or that constitutional provision be made, 
to the effect that no new street be laid out by any munici- 
pality through the land which it does not owti ; this land to 
be acquired as agricultural land, and to be leased, as demand 
might arise, at auction, in periods of twenty-five years, to be 
released at the expiration of the period ; the lessee, if a new 
person, to acquire improvements at an appraised valuation. 

Agricultural land which states like Texas and Nebraska 
own can well be treated similarly, and the proceeds de- 
voted to educational purposes in the largest sense of the 
term education, including under it art, literature, manual 
training, physical training, etc. Nebraska leases school lands, 
but sells them when they become worth $7.00 per acre. 

The plan outlined is far better, and with no expense to tax- 
payers would give Western states the finest educational fa- 
cihties the world has ever seen. 

Its social and industrial effects would also be excellent. 



A PRACTICABLE PLAN. 267 

There must always be tenants of land, and alien landlordism 
is assuming alarming proportions in our Western states. 
Land which the state owns can be controlled by the states, 
and such evils as those which now excite Illinois can be ob- 
viated. Instead of annual leases, or the very short leases 
which are the best now given, the tenant could be given 
long leases, and he would have a guarantee of payment for 
his improvements. Experience has proved this to be suf- 
ficient to secure good cultivation. English farmers nearly 
all rent their land, yet no better agriculture is known. The 
best way out of the difficulties of absentee landlordism and 
rack-rents in Western states is for the states to acquire land 
held by foreigners, and to rent it to tenants. Some such 
plan as this may be an absolute necessity in the future, 
and it is desirable that the states and cities sell no more 
lands. It might also be urged upon Congress to sell no 
federal land. The possession of land is a great social safety- 
valve, and it is madness for us to let all of our public 
domain pass into private possession. 

It does not seem to me desirable that states and cities 
should own all the land, but an ownership of part of it must 
be beneficial. 

Massachusetts has redeemed io8yW acres of land once 
under water, now in the Back Bay district of Boston. Its 
profit on the sale of this land was over four millions 
of dollars. Had it been leased, as I have suggested, this 
very valuable land might ultimately have yielded some two 
millions of dollars a year on a moderate estimate, or one- 
third more than the direct state tax for 1886.^ 

1 People were formerly accustomed to sneer at the redemption of the 
Back Bay land by the state. Now that it has proved a successful en- 
terprise, we hear comparatively little about it. Had it turned out a 
failure, it would have been cited a thousand times a day as a proof of 
the inefficiency of public works. 



268 TAXATION AS IT SHOUID BE. 

The location of some government buildings in the city of 
Toronto, Canada, is about to be changed, and this places 
the public in possession of a large tract of land in the city 
suitable for building purposes. It is to be hoped that some 
such plan as this recommended will be adopted in the dis- 
posal of it. If the renting of land by the city of Toronto 
to private parties in any way retards improvement, as some 
assert, it must be due to defects in the laws, which can readily 
be altered. Such reports, however, are to be received with 
caution, as they can often be traced to the interested motives 
of those who desire to acquire public property. 



CHAPTER V. 

NATURAL MONOPOLIES. 

NATURAL ^lONOPOLIES DEFINED AND CHARACTERIZED. 

IT is a great problem to know how to provide for growing 
municipal expenditure ; yet Nature herself seems to have 
made provision therefor in those pursuits which may be 
classed as natural monopolies, and necessarily use local pub- 
lic property. A natural monopoly is a business which is 
such by its own inherent properties. While it may be occa- 
sionally engaged in a struggle with a rival to determine the 
terms of combination, or the condition of a truce, as in a 
division of territory, it is not like other businesses subject to 
the steady, constant pressure of competition. The principal 
natural monopolies with which states, municipalities, and 
other local political units are concerned, are streets, bridges, 
railroads, canals, ferries, gas-works, electric-lighting works, 
water-works, harbors, and street-car lines. The following 
characteristics of monopolies, quoted from a recent writer 
on this topic, will help to show why they must be monopo- 
lies : — 

'' I. What they supply is a necessary. 

" 2. They occupy peculiarly favored spots or lines of 
land. 

"3. The article or convenience they supply is used at the 
place where, and in connection with, the plant or machinery 
by which it is supphed. 

" 4. This article or convenience can in general be largely, 



270 TAXATION AS IT SHOULD BE. 

if not indefinitely increased, without proportionate increase 
in plant and capital. 

"5. Certainty and harmonious arrangement, which can 
only be obtained by unity, are paramount considerations." 

The reason why certain pursuits are monopolies may be 
stated in other words. What they supply can be supplied by 
one person much cheaper than by two or three. If two gas 
companies, with a capital of $1,000,000 each, operating in a 
single city, just pay expenses, by combination, although the 
capital will be doubled, the reduction in expenses will be 
such that a profit will resuH therefrom ; added to this is the 
more complete control of price. It is, therefore, no acci- 
dent that we have never secured permanent competition in 
gas supply in Baltimore, with all our attempts. We never 
can secure it, should we try a thousand times. So it is with 
all natural monopolies. It is best, therefore, to recognize 
this fact, and act upon it. 

PROFITABLENESS OF NATURAL MONOPOLIES. 

It is further to be remarked that when natural monopolies 
charge for services, in contradistinction from free public 
monopohes, like streets, and are guaranteed a free field, 
their profits constantly rise with the growth of the city. The 
public gas-works of Berlin, in Germany, illustrate this. They 
supply gas for less than one dollar a thousand, and yet have 
become so remunerative that the profits therefrom defray 
eighteen per cent, of the expenses of the municipal gov- 
ernment. American cities have had somewhat similar experi- 
ences. Richmond and Danville, Virginia, and Wheeling, 
West Virginia, may be mentioned as examples. In Wheeling, 
gas is sold for ninety cents a thousand, and the city derives a 
profit therefrom. The corruption in connection with the gas- 
trust in Philadelphia, which has become so notorious, has 



NATURAL MONOPOLIES. 271 

ftOmewhat obscured the real nature of the question. Yet it 
may be doubted whether private corporations in other cities, 
which might be named, have had a less corrupting and de- 
basing pohtical effect.-^ . At any rate, the people of Philadel- 
phia wisely determined, after the expiration of the trust, to 
retain public ownership of gas-works, and it is said that the 
profits on them during the past year exceeded expectations 
by $1,000,000. The receipts from the works figure for 
nearly $3,000,000 in the budget of 1887. I have several 
recommendations to make in view of these facts. 

RECOMMENDATIONS. 

I recommend ^ that legislatures hereafter refuse to grant a 
charter to any private corporation to supply any municipal 
corporation in the state with gas, or water, or electric light, 
but that such undertakings shall always be public ; further, 
that municipalities be encouraged to purchase existing private 
gas-works w^hen favorable opportunity to do so occurs. If, 
however, charters are granted, they should be sold at auction 
for a limited period, with reserved right as hereinafter 
described. 

A few municipalities manage their own street-car lines, but 
the time is hardly ripe for that with us. I recommend that 
legislatures pass a law somewhat similar to that of New York 
state, but modified in such manner as to secure to the pubHc 
to a larger extent the benefits of future increments of value. 

1 A bill regulating the price of gas in Baltimore was, in April, 1888, 
stolen from the Senate file of bills after it had passed the House, and 
when it was about to come up for the third reading. Public gas-works 
have never yet employed lobbyists who stole bills from the legislature. 

2 I keep the language of my report to the Maryland legislature, for 
good reasons, although it is not in every respect the language suitable 
to a book. 



272 TAXATION AS IT SHOUID BE. 

I recommend that all street-car franchises be sold at public 
auction, to be duly advertised in newspapers in Baltimore, 
Philadelphia, New York, and Boston, and that the sale be 
for fifteen years, to the one who will give the largest percent- 
age of gross receipts — never net receipts, for in such cases, 
by some kind of hocus-pocus, net receipts tend to a mini- 
mum. At the expiration of fifteen years the right should be 
reserved to the local authority "to purchase the undertaking 
compulsorily on the terms of paying to the company the 
then value of all land, buildings, and plant belonging to the 
company, at their market value, having regard to their condi- 
tion and their suitability to the purpose of the undertaking, 
but without any addition for compulsory purchase, good 
will, or future profits." ^ 

If the city should not choose to exercise this right, the 
sale of the franchise at public auction under sirnilar condi- 
tions should then be rendered compulsory, the purchaser, 
if not the existing company, but another, to purchase all 
the property of the previous company at an appraised val- 
uation, as in the case of the purchase by the city, and under 
similar conditions. This method determines the actual 
value of the franchise which ought to go to the public, to 
whom alone it is due, and still leaves profit on capital 
actually invested to the street-car companies. If a line is 
worth but little, it will bring httle ; if much, it will bring 
much. 

A somewhat similar plan is followed in New Orleans as 
well as in New York, and the enormous profits on street-car 
lines can be seen in the fact that franchises have been sold 

1 This quotation contains the provision of the English Act, and is 
quoted from "The State in its Relation to Trade," by T. H. Farrer, 
page 92. 



NATURAL MONOPOLIES. 273 

in New York for thirty-five and forty per cent, of gross 
revenues.^ 

The charter of the Baltimore City Raihvay Company ex- 
pires in 1889, and the Act of Incorporation, drawn up by a 
far-seeing man, contemplated the enjoyment of future un- 
earned increments of value by the pubhc. The terms of 
the Act of Incorporation contain this provision : ^ " Provided, 
that the said Mayor and City Council shall have the priv- 
ilege, within two years after the expiration of fifteen years 
from the date of the passage of said ordinance,^ to purchase 
and buy out the said corporation, and all its property and 
franchises, whether conceded by the ordinance aforesaid, or 
granted by this act, for and at a fair and equitable consider- 
ation, or value ; and in case of a disagreement as to the 
said value and consideration, the Mayor and City Council 
aforesaid shall appoint one referee, and the corporation 
hereby created shall appoint another referee, who, in event 
of disagreement, shall appoint an umpire, the decision of 
whom shall be final, as to the price to be paid as aforesaid ; 
and provided further., that if the said Mayor and City 
Council of Baltimore shall decline or neglect to give notice 
to the said corporation of their intention to make said pur- 

1 Corporations endeavor to conceal enormous profits by stock-water- 
ing and the creation of mortgage-debts. One railroad of which I know 
something — and it is but one of many — has issued bonds for all the 
capital actually invested, and because it pays no dividends on stock, 
representing no original investment, its president claims that it is mak- 
ing no money. The claim that a corporation is making no money 
should not be granted until a complete exhibit is made of capital ac- 
tually invested, amount cf bonds issued, and of salaries and interest 
paid. 

2 See Maryland Code, Supplement, Volume I., A. A. 1862, Chapter 
LXXI., Feb. 13. 

3 1859. 



274 TAXATION AS IT SHOUID BE. 

chase within the aforesaid two years, then the grants and 
privileges held and enjoyed by said corporation shall con- 
tinue to belong to it for fifteen years longer from the expira- 
tion of said original fifteen years, subject to all the terms 
and conditions imposed and recognized by this act, and 
continuable thereafter in like manner, from time to time, as 
aforesaid, upon the said terms and conditions." 

It is to be recommended that the mayor and city council 
make use of this provision and sell the franchise for fifteen 
years, to the highest bidder, on conditions already men- 
tioned. 

The special tax was originally twenty per cent, of gross 
revenues, and it has been gradually reduced by unscrupulous 
legislators to nine per cent, of gross revenues. At the 
same time stock of the par value of twenty-five has risen 
to seventy-two or seventy-five, and pays twelve per cent, 
dividends. It is stated, however, that over eighteen dol- 
lars a share was never actually paid in, which would 
make the dividends nearly seventeen per cent. While every 
one is glad that the corporation has prospered, there is no 
reason why the use of the public streets — the property of 
the pubhc — should longer be granted without adequate 
compensation. 

I estimate that the franchise at public auction, duly adver- 
tised, would produce at least twenty-five per cent, of gross 
revenues, and this would relieve to that extent the business 
men of Baltimore from their load of taxation. 

This is a far more rational and a far juster plan than the 
present one, which imposes the same tax on all street rail- 
way franchises, whether worth much or little. The in- 
terests of all the corporations are thus united, and all work 
together for tax reduction, and it is in this very way that the 
past reductions have been secured. Each franchise should 



NATURAL MONOPOLIES. TJl 

be treated separately and sold for what it is worth, and then 
a weak line will see no reason for helping a powerful one to 
escape its proper tax. 

A word more may be said about the plan outlined for 
the treatment of natural monopolies. It is to be observed 
that it forces no particular system of management upon any 
city. It leaves the people free from time to time to 
decide what it is best to do. If it is felt that it is best to 
adopt private management, this course is open to the city. 
If, however, it is thought to be best to commit any or all 
natural monopohes to public management, the way is also 
clear for that at the expiration of the period. 

There are always two ways for the management of natural 
monopolies. One is the French method, private manage- 
ment under pubhc control ; the other, the German, and to 
an increasing extent, the English, namely, the direct public 
management of natural monopolies. 

Doctrinaires object to pubhc management, that it is 
inferior to private management. Experience, however, 
shows that their assertion is based on fancy, not fact. Hun- 
dreds of towns and cities in this and other countries have 
acquired gas-works, water-works, electric-lighting works, and 
it yet remains to show one single instance in which the 
acquisition has not proved advantageous. 

It is said that we ought to wait until our civil service is 
improved. One who is not a doctrinaire feels inclined to 
ask, however, What makes the civil service so bad ? The 
moment that one begins to examine facts it becomes appar- 
ent that those intrusted with the management of natural 
monopohes are themselves the most potent cause of cor- 
ruption. Such an one, on going to the City Hall in Balti- 
more, will find that the heads of departments carry in their 



276 TAXATION AS IT SHOULD BE. 

pockets passes on the street railroads of the city/ and if this 
is not an attempt at corruption, what is it? If he Hngers 
about the City Hall and becomes acquainted with city coun- 
cilmen he will find that at least one president of a street 
railroad corporation places a goodly portion of his patron- 
age, positions as conductors and drivers, at their service. 
Yet corruption of this sort is not so bad in Baltimore as else- 
where. Baltimoreans have never been so robbed as New 
Yorkers and Bostonians, for we do at least receive nine per 
cent, of gross revenues from street-car lines for the use of 
streets, in addition to regular taxes. If the investigator goes 
to Annapolis, he will find men in the legislature with railroad 
passes in their pockets, making money from railroads. Is 
it any wonder that bills to make railroads pay their fair share 
of taxes failed to pass the recent legislature ? If one goes to 
Boston, one may hear the name of an admirable man, once 
a member of the state legislature, who was not sent to 
Congress because he tried to get a law passed preventing 
members of the state legislature from accepting passes. 
One may go to a Western city, and find both Republican 
and Democratic members of the city council elected by 
a street railroad corporation which controls both parties. 

It may be well, however, to mention some facts which 
have come to my knowledge, as an illustration of existing 
methods. The last convention of the dominant political 
party in a certain state, adopted a platform in which it was 
demanded that corporations should pay their fair share of 
taxes. The party pledged itself to change the laws of taxa- 
tion so as to meet the requirements of this plank in their 
platform in case the party received a majority. The taxa- 
tion of corporations was the rallying cry of the campaign. 

1 I do not mean to say that all of these heads of departments make 
use of the passes. Such is not the case. 



NATURAL MONOPOLIES. 277 

The candidates of the party received large majorities, and a 
bill to tax corporations was introduced in the legislature. 
This bill was defeated by the efforts of the attorney of one of 
the most powerful railroad corporations in the United States, 
and of the attorney of a great telegraph company. Of these 
two attorneys one was president of the convention of the 
dominant party, to which reference has been made, and the 
other wrote the platform ! The state in which this hap- 
pened is not named, but every one acquainted with practi- 
cal politics can duplicate it. It is merely typical. 

Everywhere the facts are the same, and it must be so. 
When it is attempted to control private corporations, a 
divergence of interest between the public and private par- 
ties arises, and this makes the temptation to corruption 
irresistible. Is not this sufficient to show how far they are 
from going to the bottom of things who think that any petty 
device which does not go below the surface of things will 
reform our political life ? This can never be effected with- 
out a fundamental change in the relations between the public 
and natural monopolies. The moment a town, even a small 
city or village, intrusts water supply or gas supply to a pri- 
vate corporation, that moment a dangerous political element 
is introduced. Cities which practice self-help rather than 
reliance on corporations will be found to be better served 
and purer in their political life.^ 

Harbors and water-front ought to be municipal property, 
on account of their character as monopolies, and on account 
of the revenues which they yield. 

1 This matter would require too much space to be treated exhaust- 
ively here, and I hardly feel justified in devoting more space to it, as I 
have discussed " Natural Monopolies " at some length in my " Prob- 
lems of To-Day," shortly to appear in book form. 



278 TAXATIOX AS IT SHOULD BE. 

Abattoirs, or slaughter houses, are best rendered a legal 
monopoly, and owned by cities. They can readily be made 
to yield a considerable revenue. 

Markets are very generally owned by cities, and this 
ownership has, so far as I know, without exception proved 
advantageous and has been a considerable source of rev- 
enue.-^ 

States cannot well build and operate railroads, because rail- 
roads are national in their character, and the only authority 
which can deal with them satisfactorily is the federal govern- 
ment. Yet the fact that they are natural monopolies enables 
states to derive considerable revenue by carefully guarding 
public property and public rights. It has been suggested that 
cities build union depots, and that each city compel all rail- 
roads to use the same one and pay rental. This would be a 
great convenience, but would require legislative sanction. 
The example of Ilhnois is suggestive. That commonwealth 
reserved seven per cent, of gross revenues of the Illinois 
Central Railroad for the franchise, as Baltimore City has 
reserved nine per cent, of gross revenues of street-car receipts 
for municipal expenses. Such bargains might often have 
been made in earlier days, and opportunities to make them 
will still occur, especially in large states like Texas and Cali- 
fornia. Of course the difficulty is that the railroads usually 
control the legislatures, and that these sacrifice the people, 
and grant franchises for the benefit of private corpora- 
tions. 

The state of Mar}4and is the chief owner of the Chesa- 
peake and Ohio Canal, running from Cumberland in the 
£oal regions in the western part of the state to Georgetown, 
D.C. It has been proposed that a part of this be leased to 
the Western Maryland Railroad for an extension of its tracks 
1 See Part IV. 



NATURAL MONOPOLIES. 1*19 

along the tow-path. If that or any part of the canal is 
abandoned, it should be sold at auction for a percentage of 
gross revenues. Similar cases will occur in other states. 
Charters should always be limited, and right of repurchase 
of every natural monopoly at an appraised valuation re- 
served. 



CHAPTER VI. 

TAXATION OF THE MANUFACTURE AND SALE OF 
INTOXICATING LIQUORS. 

MODIFIED PROHIBITION. 

THE sentiment in favor of restricting the liquor traffic is 
in our Southern states daily increasing in strength, and 
some of our best-known and most respected public men have 
pronounced in favor of total prohibition. This sentiment has 
been the natural outgrowth of the actual condition of affairs, 
for the liquor saloon is seen to be the bane of politics as well 
as a curse to our industrial and domestic life. While public 
sentiment will not warrant prohibition in all parts of a state 
like Maryland, it is evidently time to proceed to place re- 
straints upon the liquor traffic. 

I recommend, in my report to the Maryland legislature, 
that the number of places where liquor may be sold be lim- 
ited to one to every two thousand of the population in incor- 
porated cities, and to one to every fifteen hundred of the 
population in those parts of counties outside of incorporated 
cities ; that the municipalities and counties be divided into 
liquor districts accordingly, and that once a year the right to 
sell liquor in each be sold at pubhc auction to the highest bid- 
der, under heavy penalties for violation of Sunday law and 
laws relating to sale of hquor to minors, and to other matters 
which, for the public good, may be included within liquor 
laws. The prohibitionists in their organ admit that a largely 
diminished number of saloons diminishes the liquor traffic, 



TAXATION OF LIQUORS. 281 

and experience of other countries seems to confirm this. 
Why cannot, then, all good people unite on such a measure 
which would at the same time yield a large revenue ? The 
right to prohibit the sale of liquor by popular vote in any 
municipality or county could and should be coupled with this. 

It will doubtless be urged that the revenues which would 
be derived under such a system from dealers in intoxicating 
liquors, would wed the tax-payers to it, and render prohibi- 
tion either extremely difficult of attainment or an impossi- 
bihty. This objection is urged against ordinary high license. 
Modified prohibition, however, is essentially different. It 
limits at once and absolutely the number of places where 
intoxicating liquors may be sold, and it is possible to couple 
with modified prohibition the provision that any violation of 
laws, of whatever degree of severity, shall work a forfeiture 
of the license. Each one who has an exclusive right, pur- 
chased at a high price within a certain territory, becomes an 
agent of the police ; for if he does not help to enforce the 
law, unauthorized dealers will ruin him. This plan does not 
work against prohibition, but where the liquor traffic exists 
it compels this traffic to defray a large part of the public 
expenditures, and this seems right because drunkenness is 
the cause of a good portion of the expenses of government. 

It cannot be doubted that the relief of the tax-payer, 
brought about by large revenues derived from sales of exclu- 
sive rights, will, to a certain extent, strengthen the liquor 
traffic. This objection to high Kcense must have weight 
with those who desire to see an ultimate triumph of prohi- 
bition. It is, however, more than offset by other features of 
modified prohibition. It concentrates the liquor traffic in 
huge establishments, and drags it before the public where all 
its evils must be conspicuous. Private monopoly is odious, 
and this odium would offset any advantage which manufact- 



282 TAXATION AS IT SHOULD BE. 

urers and dealers in intoxicating liquors might derive from a 
payment of a very considerable portion of the public expenses. 
It is difficult to tell of any other way in which this entire 
business could better be placed on its own merits or de- 
merits, as the case may be. The plan formerly pursued on 
the continent of Europe was to limit absolutely the number 
of saloons. No additional license was granted unless there 
appeared to be need of additional places for the sale of 
intoxicating beverages. This plan was also followed in old 
New England. The following quotation is from the records 
of the court at Springfield, Massachusetts, in September, 1677 : 
"There being presented to this court the desires of some 
for liberty to sell wines and liquors to their neighbours, in our 
towns, with promise to sell at reasonable rates, this court 
doth not see reason to grant such desires, but orders that it 
be declared to the ordinary keepers that it is expected that 
they sell their wines and liquors at reasonable rates, or that 
otherwise the court will put upon it to seek ways for help by 
granting license to others to sell or otherwise." Although 
every one appears to have kept cider and stronger liquors, 
by order of the court, in 1675, no liquors could be sold 
except to the heads of families, save by the regular licensed 
ordinaries.^ These old methods of favoritism are not possi- 
ble now. It was necessary to abandon them in Germany 
under the influence of democratic ideas, and the effects of 
an increased number of licenses were seen in an alarmingly 
increased amount of drunkenness and wretchedness. It is, 
indeed, unjust to give special favors to a few who already 
have privileges. Public auction is not favoritism. The right 
to sell goes to the highest bidder. This gives us the advan- 
tages of the old system of restriction, without the disad- 
vantages of favoritism. 

1 From Dr. Bemis' paper on " Old Time Answers to Present Prob- 
lems," to which reference has already been made. 



TAXATION OF LIQUORS. 283 



HIGH LICENSES. 

Wholesale dealers might be charged a license fee of ^2000 
each, and also be obliged to pay a business tax of ten per 
cent, of the annual rental value of their places of business. 
This additional tax could be placed also on retailers. 

High license, considered simply from a pecuniary stand- 
point, yields large returns, and if any license is granted, why 
not a high license? A license fee of ^500 for the country, 
and ^1000 for the city, is not too high. The Illinois license 
system compels all local bodies to charge at least $500, and 
allows them to charge as much more as they please, and 
even to suppress it altogether. The minimum charge for 
beer selling alone is ^150, but local authorities have generally 
raised it to ^500. It is stated that the number of saloons 
has been reduced from 13,000 to 9000, and the revenue from 
these licenses raised from ^700,000 to $4,500,000.^ 

In Missouri the minimum license fee is ^550, and the 
maximum $1200. The revenue from license fees increased 
from ^600,000 to ^2,000,000. 

The charge for a license in Michigan is ^500, and for one 
doing a wholesale and retail business, ^800. The amount 
of revenue reported by the county treasurers of Michigan 
for 1885 was $1,067,005.77; for 1886, $1,186,366.95. 

Pennsylvania has inaugurated a new high license system. 
The charge for a license is $500 in the largest cities, and 

^The annual statement of the finances of Chicago for 1887 shows 
that the amount received for licenses during that year was $2,225,768.71. 
This sum must include other licenses than liquor licenses, although by 
far the greater amount undoubtedly comes from liquor licenses. Prop- 
erty taxes yielded during the year $5,166,155.72, and the total receipts 
amounted to $16,127,832.03. Part of the sum was on account of re- 
funding operations and special assessments. 



284 TAXATION AS IT SHOULD BE. 

liquor-dealers must secure two bondsmen with real estate 
valued at ^2000. These bondsmen must be reputable citizens 
and must not be engaged in the manufacture of intoxicating 
liquors. No man can be bondsman for more than one appli- 
cant. This provision makes it more difficult than elsewhere 
to secure licenses, for in other places, Illinois for example, 
brewers go on the bond for dealers, and one man will often act 
as bondsman for half a dozen dealers. It is also provided that 
citizens may appear before the board granting the licenses, 
and enter objection against any applicant, on the ground that 
he is a law-breaker or disreputable character, and if the fact 
is estabHshed, the license must be withheld. It is expected 
that the number of saloons in Philadelphia will be reduced 
from 6000 to less than 3000 under the operations of this 
law. It leaves a good deal, it will be noticed, to the discre- 
tion of the body granting licenses, which is the court of 
quarter sessions, and by shutting out many competitors 
increases the value of a hcense to the one who receives 
it, while the full value of the license is not secured to the 
pubhc. Room is opened for political abuse of the right 
to grant licenses. The auction plan secures the full value 
of the license for the public, and does not offer opportunities 
for favoritism.^ 

The charge for a license in cities of Nebraska is ^1000, 
and in smaller places, ^500. It is said that one-half of the 
saloons in Omaha have been suppressed, and that the reve- 
nues from this source have increased from $50,000 to nearly 
$250,000. The license taxes are the same in Minnesota as 
in Nebraska. Minneapolis has a peculiar system, resembHng 

1 The Pennsylvania law includes the old Teutonic idea that licenses 
should be granted only where there is need of a liquor seller for pubHc 
convenience. It must, according to the law, be shown " that the place 
to be licensed is necessary for the accommodation of the public." 



TAXATION OF LIQUORS. 285 

somewhat the system of modified prohibition. No hqiior 
at all may be sold outside of a certain district in the heart of 
a city, or outside of the patrol limits, as these limits are 
usually called. This seems to be a good feature of a high 
license system. It is described in these words by a gentle- 
man of Minneapolis, of the highest integrity and intelligence : 
" Our plan, you know, is an effective restraint of the traffic 
inside the actively patrolled business districts of the city, 
the line having been originally fixed by the mayor and the 
city council in the spring of 1884, and placed in the charter 
by the legislature just a year ago. It was adopted concur- 
rently with an increase of saloon license from ^100 to $500 
and a new regime of strict enforcement of law. The conse- 
quence was the closing of all establishments, perhaps seventy- 
five or one hundred, outside the line, and a still greater 
reduction through the operation of high license inside the 
line. The last legislature by a general law for cities made 
the license fee ^1000; and this has reduced the number of 
saloons very materially ; not more than one-twelfth, I should 
estimate, of the area of the present corporate limits of the 
city is included in the liquor limits. Probably four-fifths of 
the population hve outside the limits. Saloons eliminated 
from workingmen's residence neighborhoods have an excel- 
lent moral effect. Citizens, regardless of party, would resent 
a widening of the limits if that should mean encroachment 
upon their territory or residence neighborhood. It is a self- 
sustaining arrangement when once established, and almost 
self-enforcing. It has proved highly satisfactory." ^ 

1 Some of the statistics in this chapter are taken from articles in 
the Nation for Jan. 12, 1888, and Feb. 16, 1888. It is only fair to say 
that the Nation is an enthusiastic advocate of high license, and its 
conclusions and facts are both called in question by prohibitionists. 
Prohibition means the suppression of all revenue from the traffic in 



286 TAXATION AS IT SHOULD BE. 

intoxicating liquors. Its advocates generally claim that it is sinful to 
authorize by law the existence of such a curse as the hquor traffic, 
and that to derive profit from it makes the community a partici- 
pator in its crime. This is a phase of the subject which it can hardly 
be expected that I should treat in a work on taxation. It comes more 
properly within the scope of moral science. From a narrow financial 
standpoint, high license is an undoubted success. Nevertheless, it 
must be confessed that there is reason to look with apprehension upon 
the large revenues derived by high license. These are a bribe to the 
public. But if the choice is between low license and high license, it 
seems to me that high license is the lesser of the two evils. 



CHAPTER VII. 

TAXATION OF INCOMES. 

THE POSITION OF AN INCOME TAX IN A SYSTEM OF TAXES. 

THE taxes which have already been described are suita- 
ble for local purposes. The central tax of a proper 
system of local taxation is the tax on real estate ; and this 
will vary from year to year according to the needs of the 
public treasury. An estimate must first be made of the 
revenues from productive property and local enterprises, 
from natural monopolies, from liquor licenses, and from all 
other sources, and then a tax-rate on real estate, just high 
enough to make up what is still lacking should be fixed. It 
ought not in any American city to exceed one per cent, of 
the true selling value of the property. 

The central and variable tax in a proper system of state 
taxation ought to be an income tax. This should vary from 
year to year according to the needs of the state government, 
and its rate should be calculated after the revenues from 
other sources have been estimated. 

EQUALITY OF TAXATION IMPOSSIBLE WITHOUT AN INCOME TAX. 

It has already been stated in this work that the farmers of 
Maryland and her sister states, and other hard-working peo- 
ple, are right in their feeling that all men of means should 
contribute to the support of government in proportion to 
their ability. It is a just grievance that many who can 
amply afford to bear a part of the burdens of government 



288 TAXATION AS IT SIIOUID BE. 

do not participate in them, while they do derive inestimable 
benefits from the existence of government. There is one 
way, and only one, to remedy that evil, and that is, by an 
income tax, which requires calm and judicial examination, 
undisturbed by the hue and cry raised by tax-dodgers or 
even by the prejudiced. 

First. It is universally, or almost universally, admitted 
that no tax is so just, provided it can be assessed fairly 
and collected without difficulty. More nearly than any 
other tax does it answer the requirements of that canon of 
taxation which prescribes equality of sacrifice. Furthermore, 
it is of moment that the income tax, unlike license charges, 
does not make it more difficult for a poor man to begin 
business or to continue business. Its social effects, on the 
contrary, are beneficial, because it places a heavy load only 
on strong shoulders. Even for men of large means engaged 
in business it is a tax to be strongly recommended, for such 
men will in some years make little or nothing, or even lose 
money. Now, our property tax is merciless ; it exacts as 
much in a year when a business man is strugghng to keep 
his head above water as in a year of rare prosperity ; whereas 
the income tax exacts much only when much can be given 
without financial embarrassment. If it were practicable to 
substitute an income tax for the whole of the property tax, it 
would save many a man from bankruptcy. I will repeat, 
with some modification, in this connection, words I used in 
my special report as member of the Baltimore Tax Com- 
mission : — 

It is the fairest tax ever devised ; it places a heavy 
burden when and where there is strength to bear it, and 
lightens the load in case of temporary or permanent weak- 
ness. Large property does not always imply ability to pay 
taxes, as taxes should come from income ; even when assessed 



TAXATION OF INCOMES. 289 

on property it is only an indirect device for estimating in- 
come. An income tax spares the business man in season 
of distress and helps him to weather the storm, but asks a 
return for the consideration shown in days of increasing 
prosperity. 

AN INCOME TAX WILL PROMOTE GOOD GOVERNMENT. 

Again, why should the man with a large income but with 
no property escape all share in the common burdens ? There 
is a considerable and increasing class living in great comfort 
on incomes of large proportions, say five, ten, twenty, thirty, 
or forty, or even fifty thousand dollars, who by insurance 
and various devices, protect themselves and their famiUes 
for the future, and yet pay no taxes. This is an injustice to 
other classes and a harm to the commonwealth, because 
these men are often careless and indifferent about their 
pubhc duties, knowing that their income is not affected by 
high or low taxation. They appear to pay nothing to gov- 
ernment, and as it seems to cost them nothing, they too 
often care little for it. 

One of the reasons of poor government in our states and 
cities is to be found in the failure of large and influential 
classes to concern themselves about practical politics. They 
often speak of politics with an affectation of superiority, as 
if they were above anything so base and common. This 
attitude is not uncommon among professional people, as 
lawyers, physicians, and teachers. These men have oppor- 
tunities for personal cultivation and for gathering knowledge 
which are better than those enjoyed by other members of 
the community, and their influence ought to be large and 
beneficial. They must pay taxes because indirect federal 
taxes form a part of the price of commodities which they 
purchase, and because a considerable portion of our direct 



290 TAXATION AS IT SHOULD BE. 

taxes, like the tax on house property, is shifted and reaches 
them indirectly. This, however, is not noticed. What is 
needed is a tax varying with public needs, and with the integ- 
rity and efficiency of administration, which will reach the great 
mass of citizens, — a tax which will directly and immediately 
rest upon the tax-bearer. We have too few payers of direct 
taxes in our states and cities ; but the income tax is a tax 
which is felt and which must be paid by the tax-bearer. It 
is precisely the kind of a tax needed, and it is beyond ques- 
tion that it would change the attitude of a large portion of 
the community towards government. 

The incomes enjoyed by the professional and salaried 
classes and some others are frequently the results of large 
expenditures in cultivating one's powers, and they create 
what can be called personal wealth. One man spends 
;^ 1 0,000 in preparing himself for some lucrative position, 
and derives therefrom an income, but pays no taxes, while 
the man who spends ^10,000 on a farm must contribute 
every year a sum large in proportion to income for the 
support of government. 

CURRENT OBJECTION AGAINST AN INCOME TAX. 

Some of the current objections against the income tax 
must receive attention. 

It is said to be inquisitorial. What tax is not? What 
tax is in fact less so ? Does the tax on whiskey and tobacco 
involve a less searching examination into private affairs? 
On the contrary, the manufacturer of tobacco and the 
whiskey distiller must expose their every operation to in- 
spection, and they are surrounded by spies. Those who 
try to evade the tax are frequently hunted down like wild 
beasts, and its collection is attended with bloodshed of tax- 
payer and tax-collector. Is the tariff less inquisitorial? 



TAXATION OF INCOMES. 291 

On entering an American port you must open your trunk 
and exhibit all you have, and in case of suspicion, your very 
person is liable to be searched. Is the personal property 
tax less inquisitorial ? By no means. The income tax asks 
one question, while the personal property tax, if really 
enforced, demands every item of personal property, and 
involves an exposure of all assets and liabilities. Anything 
more inquisitorial cannot be conceived. We talk about 
the European system of government espionage and prying 
into one's affairs, but the German writer. Baron von Reit- 
zenstein, who wrote the review of the Baltimore Tax Com- 
mission's report, to which reference has already been made, 
called attention to precisely these features in our personal 
property tax, as noteworthy. He said it was like the 
examination made in his country of the estate of dece- 
dents in the probate court. It is said that it produces 
perjury, but existing taxes are still more demoralizing. 

It is said that it is difficult to assess it fairly. It is incom- 
parably more difficult to assess a personal property tax 
fairly. It is so much easier to assess an income tax that 
assessors sometimes first assess a man's income, and then, 
on the basis of that estimate, his probable personal property. 
This plan is sometimes followed in the City Hall in Balti- 
more. It is, indeed, on this account that a part of the 
prejudice against the income tax exists. I do not intend 
to express any condemnation of men of large means as a 
class, but you will find among them, as in all classes of 
society, unscrupulous persons. Now, these found the income 
tax a less easy tax to evade than the personal property tax, 
and precisely on that account they raised a hue and cry, 
which, by reason of their control over influential newspapers, 
attracted undue attention. In the case of the federal in- 
come tax, its very excellence was turned against it. A chief 



292 TAXATION AS IT SHOULD BE. 

objection to it was that it accomplished precisely what it 
was intended to accompHsh. 

No one pretends that the pubUcation of the valuation of 
a man's personal property will injure him in any way or 
destroy his credit ; that was alleged with reference to income 
tax. Why the difference? Because the one was more 
nearly accurate than the other. No one attaches any im- 
portance to the publication in the newspapers of personal 
estates taxed in New York and Brooklyn, but importance 
was attached to the income tax returns. 

Any one who is honest must confess that it is easier to 
discover income than personal property. I own a promis- 
sory note, but where it is I do not know. How can a tax- 
assessor find it ? If he finds it, how can he tell what it is 
worth? I do not know myself. It may be paid and it may 
not be paid. If I receive any income from it in the shape 
of interest, that is something which I know. I have some 
copyrights. What are they worth? I do not know. How 
can an assessor tell? W^hat income they yield during any 
one year is a matter which I know well enough. How can an 
assessor find any evidence of the fact that I am the owner 
of a copyright? There is not one assessor in a thousand to 
whom it ever occurs that such a form of personal property 
exists. If, however, I derive an income from my promis- 
sory note and from my copyrights, it is altogether probable 
that I may give some evidence of the receipt of income. 
The style in which I live, the property I purchase, and a 
thousand and one acts give evidence of income. It is not 
asserted that it is always an easy thing to tell what income 
is ; but it is incomparably easier than to discover intangible 
property. The facts just given are merely typical. Every 
business man can duplicate them. Anv one who is willino: 
to accept the taxation of personal property as a just and 



TAXATION OF INCOMES. 293 

proper mode of taxation, and at the same time objects to an 
income tax on the grounds that it is inquisitorial in nature, 
and that income cannot be fairly assessed, must not be 
surprised if either his intelligence or his sincerity is called 
in question, 

A further indication of the fact that a general personal 
property tax is tolerated only because laws and constitu- 
tional provisions are not enforced, is seen in the fate 
which usually overtakes reports of tax commissions. Some 
people feel dissatisfied on account of undue and unequal 
taxation, and instigate the appointment of a tax commission. 
As a rule the force of tradition and prejudice is such that no 
radical changes are recommended, but laws are recom- 
mended which simply aim to enforce the existing system. 
The reports are then, with or without due form and cere- 
mony, buried, and sleep the sleep from which there is no 
awakening. 

A special tax commission made a report to the South 
Carolina legislature on taxation in 1886, which had no other 
design in the world than to enforce the law, and this is what 
a disgusted advocate of the tax commission's recommenda- 
tions wrote me in regard to their bill : " It was killed in the 
Senate before one-fourth of it had been discussed. This 
was done because it was said that their suggestions were too 
inquisitorial, etc. The ignorance of legislators generally was 
never more gross and patent than in this instance, for it is a 
fact that every one of these so-called ' suggestions ' of the 
commission (upon which the Senate was induced to kill the 
bill) were ' original suggestions ' taken verbatim from the 
existing tax law ! The bill, of course, never reached the 
House of Representatives, and was not discussed by that 
body." 



294 TAXATION AS IT SHOULD BE. 

It has been said that our Baltimore Tax Commission^ 
report was killed by the pressure from business men even 
before the State Tax Commission^ was appointed. Now, 
for this they can scarcely be blamed severely, for to enforce 
the law would have injured the city generally. Perhaps it 
can at most be said that they should either have favored the 
enforcement of law or have agitated for its repeal. 

INCOME TAX AND PERSONAL PROPERTY TAX CONTRASTED. 

Now, we have in the personal property tax a tax which 
grows in disfavor, as it year by year becomes more and more 
unsuitable to our industrial situation. In the income tax, 
on the contrary, we have a tax which is congenial to the 
spirit of democracy, and which tends to become more gen- 
eral as the masses acquire power ; a tax which, wherever it 
has been honestly tried, is administered with increasing ease 
and justice, and which grows uninterruptedly in popular 
favor. The present income tax in England was introduced 
as a temporary measure by Sir Robert Peel, in 1842. Its 
object was to raise funds " to relieve trade and commerce 
from the trammels by which they were hampered and bound." 
It was imposed first for four years, but was continued from 
time to time. The reform in the tariff was begun and carried 
out in connection with the taxation of incomes, but for a long 
time it was intended ultimately to abolish tlie income tax. 

1 The commissioners were Messrs. John P. Poe, Summerfield Bald- 
win, Richard T. Ely. Mr. Charles M. Armstrong was appointed secre- 
tary of the commission. The commissioners were appointed in 1885. 
The report was made in 1886. 

■2 The State Tax Commission consisted of Messrs. John P. Poe, 
Charles M. Armstrong, secretary, James Alfred Pearce, James McSherry, 
and Richard T. Ely. They were appointed in 1886 and made their 
report in 1888, The bill drawn up by the state commission was killed 
by corporation attorneys. 



TAXATION OF INCOMES. 295 

As time went on, however, and it was learned how to assess 
it with an increasing approximation to perfect justice, it was 
finally decided to keep it as a permanent part of the English 
financial system. The experience of republican Switzerland 
and monarchical Prussia appears to be equally favorable to 
the income tax. 

It is not meant to assert that the income tax is a perfect tax. 
No tax is. One who desires may discover evidences that fault 
is found with it in the countries in which it exists. Neverthe- 
less, one who asserts that it does not meet with increasing ap- 
proval where it exists, seems to me strangely ignorant of the 
facts. The reader is referred to the foreign literature of taxa- 
tion. Nearly all Americans who have given the subject of 
taxation attention, and who can make the slightest claim to be 
considered authorities, reject the personal property tax as un- 
just and impracticable. On the other hand, I know of no 
recent writer in any country, where an income tax has long 
been in force, who does not approve of it. The test of expe- 
rience has been decisive in both cases. John Stuart Mill 
speaks of an income tax in his " Political Economy," which 
was written when the present income tax in England was new, 
and the impression which one gathers is perhaps unfavorable 
to the income tax, because, as the "practical " business man 
says, it is theoretically excellent but does not work well in prac- 
tice. Mill's follower, Fawcett, whose general principles would 
be more unfavorable to an income tax, has evidently been con- 
vinced by experience that it is, as taxes go, a just and fair 
tax in its actual workings, and he favors it in the sixth edition 
of his treatise " Manual of Pohtical Economy," published 
in 1883. The contrast between income and personal prop- 
erty taxes is thus most striking. The longer the latter 
last, the worse they become, and the smaller the favor with 
which they are regarded ; the longer the others continue, 



296 TAXATION AS IT SHOULD BE. 

the better they work, and the greater the favor with which 
they are regarded. The income tax is a tax adapted to 
the needs of modern states. 

Our federal income tax excited annimosity on several 
accounts. First, an income tax is more suitable for a state 
than a federal government, because a federal government is 
something far off, and the different amounts paid by various 
sections produce irritation and ill-will. 

Second, designing men purposely made it ridiculous, so 
as to render its abolition easier ; and the law was always full 
of needless imperfections in its details.^ Third, it met with 
special disfavor in some parts of the country, as in Maryland, 
it is probable, because it was levied to carry on a war which 
was not popular. 

AN ECCOME TAX MUST BE A STATE TAX. 

An income tax is not suitable for a city, because it must 
then act like our personal property tax and drive people 
from cities to suburbs. jMost cities in America are sur- 
rounded with a '•' tax-payers' paradise," or a suburb to which 
the wealthy resort, in order to escape the payment of taxes 
in the cities where they gain a livelihood. These people 
would similarly escape their fair share of the income tax. If 
any one will take a map of the United States and examine 
the situation of our great cities, he will find that there are 
comparatively few who could leave any American common- 

1 Before the final stage of absurdity was reached, it worked, after all, 
far better than many would have us believe, and it answered the de- 
mands of economical administration, for it was the cheapest tax to 
collect among all the federal taxes, with the single exception of the taxes 
on national banks, which cost nothing to collect. It did not cost over 
two per cent., while the general average cost of collection was between 
three and four. 



TAXATION OF INCOMES, 297 

wealth to escape a tax. New Yorkers might move to 
New Jersey, as some do, but there would be no general 
exodus to escape a light income tax, say one of one per cent., 
which does not exceed a property tax of one-twelfth of one 
per cent. Comparatively few change their states willingly, 
because the ties to one's state are more numerous and 
stronger than to one's city. Moreover, the relief to business 
and property which would come from a proper income tax 
would be so great that ten would be drawn to any state levy- 
ing it for one who would leave. 

ASSESSMENT OF AN INCOME TAX. 

An income tax for state purposes is therefore to be recom- 
mended, because, while it is suitable for neither a munici- 
pality nor a federal government, it can be assessed and 
collected with comparative ease in a state, and because, 
while it is not perfection, it comes nearer to it than do most 
forms of taxation. There are various methods of assessing 
an income tax. One is self-assessment ; another is assessment 
on part of officials, with the right of a tax-payer to protest 
and show that his income is less than it has been assessed. 
It is not clear what heed should be given, in these days of 
publicity, to the objection against publicity of income. How 
can that be worse for a man's credit than our various mer- 
cantile agencies, with their estimates of the credit of every 
business man ? Practically, where the income tax exists, this 
matter seems to occasion little difficulty. 

It has also been suggested that it would be a good thing 
to make people disclose their incomes, as it would remove 
the temptation to many to pretend to be richer than they 
are, and to spend money which they cannot afford. 

However, if it is desired to avoid publication of incomes, 
and this seems on the whole desirable, there would seem to 



298 TAX ATI OX AS IT SHOULD BE. 

be no reason why this should not be done. Sometimes it is 
stated on personal property blanks that the returns are not 
open to public inspection.^ A similar arrangement might be 
made with reference to returns of income tax, and probably 
a combination of the self-assessment plan and the assessment 
by tax officials would work best. 

There are many eWdences of income. In cities the 
rent which a resident pays in certain streets usually bears 
a given ratio to income. In England the rent paid by a 
farmer is supposed to be twice his income. There is, no 
doubt, a tolerably constant ratio between rent and income 
of farmers in different parts of the United States, and if this 
ratio is not always the same, it must be remembered that a 
rough kind of justice is the best which can, in these matters, 
be attained. If a man owns the farm which he is cultivating, 
this makes no difference, for its annual rental value can be 
assessed, and that added to what would be a tenant's income. 

Corporations can be made to pay the income tax on 
all dividends and interests, also on all salaries. States 
and municipalities can easily deduct the income tax from 
interest on all bonds. Each tax-payer can then be allowed 
to deduct the tax already paid. It is, of course, necessary 
that the blanks to be filled out, define income accurately. 
It is what one has for expenditure from all sources, property, 
business, and profession. To deduct house rent is absurd. 
Income is for the purpose of paying rent, as it is for defray- 
ing other expenses. Where a tax-payer owns the house 
which he lives in, its annual rental value must be regarded as 
a part of income. It is impossible to go into details in this 
place, for space does not admit of it. The works referred 
to in Part I. wall give details. Reports of the English com- 

1 In Massachusetts, for example. 



TAXATION OF INCOMES. 299 

missioners of internal revenue give full information about the 
English income tax. The third volume of Dowell's " His- 
tory of Taxation and Taxes in England " explains the 
peculiar features of the English income tax and presents a 
sketch of its history. 

If it is decided not to make the returns of income public 
as a guarantee to the public, the Georgia plan of laying 
returns of income tax before the grand juries of each county 
and municipality might be adopted, not with any view to 
the institution of criminal proceedings, but for the purpose 
of revision. 

Mr. J. R. Lamar, of Augusta, Georgia, an excellent author- 
ity, has had the goodness to explain the actual workings of 
this feature of taxation in Georgia : " The provision requiring 
the tax digest to be laid before the Grand Jury for inspec- 
tion is more valuable in what it prevents being done than in 
what is done by the Grand Jury itself. Many men, knowing 
that the tax digest is to be examined by the Jury, make 
fuller returns than they otherwise would, and many a tax- 
receiver of returns who would accept from his friends and 
allies a very meagre showing is much stricter when he knows 
his work is to be inspected by the grand jurors who are more 
or less familiar with the financial standing of most tax-payers. 
While not frequently the case, there are many instances 
where they do add to or take from assessments. I know of 
no other state having this provision as to the Grand Jury. It 
is not exhaustive, nor a sufficient requirement by itself, the 
jurors generally having far too short a time to be able to 
give it full attention. It works well as far as it goes, and is 
a good check on officers who might otherwise favor their 
friends and oppress their enemies." This plan might be 
extended or some similar plan adopted for the control of 



300 TAXATION AS IT SHOULD BE. 

income tax returns. It will not be found difficult if an 
honest effort is made to provide satisfactory guarantees.^ 

SUFFICIENCY OF A LOW INCOME TAX. 

The income tax, in my opinion, should be a variable tax 
on all incomes in excess of ^600, but only on the excess in 
every case. The income tax should be high enough each 
year to meet all deficiencies from other sources. I estimate 
that in Maryland it need never exceed one per cent., which 
is hardly more than equal to a tax of one-twelfth of one per 
cent, on property. In the year 1866 Maryland paid to 
the federal government over $1,700,000 in income tax, or 
nearly enough to meet all the expenses of our state govern- 
ment at present. Of this sum over $800,000 was the return 
from the five per cent, tax, which would be $160,000 for 
each one per cent. ; but, as in the arithmetic of taxation, two 
and two sometimes make only one, so it may be expected 
that in the case of an income tax, if you reduce the rate, the 
returns will not diminish in the same proportion. It is then 
safe to calculate that a one per cent, tax on those incomes 

1 Hon. William A. Wright, Comptroller-General of Georgia, has 
kindly written me a letter on the examination of tax returns, which 
reached me some time after I received ]Mr. Lamar's letter. The follow- 
ing extract is made from Mr. Wright's letter: "The grand juries in 
most of the counties of this state bestow but little time upon the exam- 
ination of their tax digests. The reason for this is that their time is 
entirely taken up in other matters that cannot be neglected. If our 
laws were so amended as to permit the juries to sit a sufficient time 
after the adjournment of the court to investigate carefully the tax 
returns of their counties, I am satisfied it would result in bringing up 
the value of the property of the state at least fifty per cent. In many 
of the counties the work is done very thoroughly, and the digests show 
the effect of the work in increased valuations." 



TAXATION OF INCOMES. 301 

would yield one-third as much as a five per cent, tax, or 
$267,000. 

The sum of $987,534.41 was the proceeds of a ten per 
cent, tax on incomes over I5000. A one per cent, tax would 
probably have yielded one-fifth as much, or about $195,500. 
The two sums added equal $462,500. The $500 was not 
deducted in each case. On the other hand, wealth and 
population have increased,^ and there is not the bitter 
opposition to the state government which existed in many 
minds against the federal government. I therefore estimate 
that a one per cent, income tax at the present time could 
safely be relied upon to yield $500,000, which w^ould be 
ample, with other revenues, to meet the deficiency due to 
the exemption of real estate from all state taxation. 

There can be no difficulty in raising all the money which 
our states need, by means of an income tax, together with 
all other sources of revenue described. The total amount 
raised by the federal income tax in 1866 was $61,071,932.25, 
and in 1867 it was $64,984,437. The direct state tax in 
Massachusetts yields less than one and a half millions of 
dollars ; the federal income tax in 1867 yielded $8,849,753. 
The direct state tax in New York during the year ending 
Sept. 30, 1887, brought into the state treasury $5,805,400, 
whereas the income tax in 1867 yielded $20,107,547. 
Similar results may be secured by comparing other states 
which were both in 1867 and in 1887 in a normal condition. 

1 Population has increased over one-third, and there is reason to 
believe that the number of those with taxable incomes has increased in 
like proportion. One of the most astonishing things about a city like 
Baltimore at the present time is the vast number of families living in 
great comfort. One can walk through miles of streets on which reside 
families with incomes varying from $1500 to $10,000 or more. Other 
facts all point to a large increase in the number of families with in- 
comes in excess of $600. 



302 TAXATION AS IT SHOULD BE. 

The total amount raised by state taxation is about ^65,000,- 
000, according to the American Almanac. This evidently 
includes more than the direct state tax. Besides, it must 
be remembered that the Southern states were impoverished 
and made insignificant returns of income. Population and 
wealth have increased enormously since 1867. There is 
much that is illusory about the alleged prosperity of 1866 
and 1867. j\Iany were making money rapidly, but many 
more were suffering privation. The number who have in- 
comes exceeding $600 must be far greater than twenty years 
ago. 

THE INCOME TAXES EST A]MERICAN STATES. 

Two states levy general income taxes now. In Virginia, 
on income derived from interest or profits, the amount in. 
excess of $1000 is subject to a tax of one per cent. The pro- 
ceeds from this tax amounted in 1886 to $20,755. ^^ Mas- 
sachusetts it is provided that income from annuities, from 
certain ships and vessels, and so much of the income from 
a profession or trade or employment as exceeds the sum of 
$2000 shall be taxed ; but it is further provided that no 
income shall be taxed which is derived from property sub- 
ject to taxation. 

PENNSYLVANIA LEVIES AN INCOME TAX ON SPECIAL KINDS OF 
INCOME. 

In Pennsylvania an income tax of three per cent, is levied 
on the income or net earnings of all corporations,^ foreign 
insurance companies,^ and on every private banker and 

1 Except those liable to a tax on capital stock or gross receipts. 

2 Foreign insurance companies pay three per cent, on premiums 
received for business transacted in the state. 



TAXATION OF INCOMES. 303 

broker, or unincorporated banking and savings institution, 
and express company. The receipts from this source in 
1887 were ^81,596.92 out of a total of $7,646,147.37.^ 

The constitution of North Carohna forbids an income tax 
on income derived from property already taxed. Charlotte, 
in that state, levied a tax of one per cent, on all incomes, 
the sources of which are not already taxed. All this income 
tax legislation is far from what it should be. Massachusetts 
exempts $2000 and income from property already taxed^ 
which must make it a farce. In no state does the income 
tax occupy an essential position in its scheme of taxation ; 
and this it must do to fulfil its proper functions and to work 
satisfactorily. All incomes above a moderate sum, like $600, 
must also be taxed without exception. The moment excep- 
tions are allowed, the difficulties of administration are in- 
creased, and the door is opened for fraud. 

ALL INCOMES ABOVE A MODERATE EXEMPTION SHOULD BE 
TAXED. 

An income tax must be assessed on all income regardless 
of source, even if that source has already been taxed. 
Taxes may be divided into taxes on property or things, 
and taxes on incomes. A tax on property is a tax on 
things. A piece of land as such must pay a certain tax, — 
a sort of first claim on its revenues, regardless of ownership 
by A., B., or C. An income tax is strictly a personal tax. 
It asks. How much income has this man ? It is regardless 
of any particular source, but includes all sources. Business 
expenditures and taxes are excluded from income, but per- 
sonal expenses, as for rent, food, clothing, etc., are included, 

1 See Worthington's " Historical Sketch of the Finances of Penn- 
sylvania," pages 89, 90. 



304 TAXATION AS IT SHOULD BE. 

because it is for these purposes that income exists. If a 
man occupies his own home, its estimated annual value is 
part of his income. 

Property- owners are at first inclined to object to what 
they call double taxation. They are the last ones who 
ought to object, because the very purpose of the income tax 
is to relieve them. One of the conditions of its successful 
operation in the taxation of all income, and the one whose 
income is wholly from property will find his tax reduced, 
because income tax and property tax together will amount 
to no more than the property tax now. The larger the amount 
raised by the income tax, the less the amount to be raised 
by a property tax. It is also acknowledged that income 
derived from a permanent source — property — ought to be 
taxed at a higher rate than income from a temporary and 
precarious source, — one's personal knowledge, skill, strength, 
— because all of the former income may be spent, while a 
part of the latter must be saved for future needs and con- 
tingencies. A professional man with an income of $10,000 a 
year, and nothing else, must lay by something for old age, 
for life insurance, for education of children, etc., while the 
man with $10,000 a year from United States bonds can spend 
it all and know that in case of death or disability his income 
continues. He can also increase his income by personal 
exertions, if he will. Now, account of this difference is 
taken in the fact that provision is made for the taxation of 
property from which income is derived. The man who has 
only income cannot complain, for the man whose income is 
derived from property pays a higher tax. The man of prop- 
erty is the last one who ought to complain, for his taxation 
is lessened. 

Let us see how this would affect the farmer. 

Let us say a man has a farm worth $10,000 in Maryland. 



TAXA TION OF INCOMES. 305 

If it yields ;$i400 a year, that is doing well. If his taxes are 
one per cent., that would be ^loo a year, of which ^18.75 
would be for state purposes. This latter sum would fall 
away under the scheme of taxation here elaborated, and an 
income tax of ^8.00 would take its place, for this is one per 
cent, on the excess of income over $600. The farmer would 
save the difference between ^18.75 and ^8.00, or $10.75, 
which would be paid by the income tax on those who are 
now inadequately taxed. But this is not all. The system of 
taxation here elaborated might be expected to reduce local 
burdens, and I hope, in Maryland, on an average by about 
one-fifth. The farmer would then save an additional $16, or 
a total of $26, reducing his taxation from $100 per annum 
to $74 per annum. 

PROGRESSIVE VERSUS PROPORTIONAL TAXATION. 

The question of a progressive rate of taxation has been 
much discussed. One of the ablest arguments for a pro- 
gressive rate is thus stated by Montesquieu in referring to the 
Solonian taxation in Athens : " The tax was just, though it 
was not proportional. If it did not follow the proportion of 
goods, it did follow the proportion of needs. It was judged 
that each had equal physical necessities, and that those 
necessities ought not to be taxed ; that the useful came 
next, and that it ought to be taxed, but less than what was 
superfluous ; and lastly, that the greatness of the tax on the 
superfluity should repress the superfluity." ^ 

It might then seem just to have three rates of taxation : 
one for incomes, sufficient to furnish necessities ; one for 
those sufficient to provide the useful ; and one for those 
large enough to warrant luxuries. 

1 From Walker's " Political Economy," 2d edition, page 498. 



306 TAXATION AS IT SHOULD BE. 

Another reason for a progressive rate of taxation is found 
in a principle thus stated by Prof. W. G. Sumner : Taxation 
tends to diffuse itself, but on the line of least resistance.^ 
Now, the line of least resistance is found among the poor, 
the line of great resistance among the rich ; whereas the 
line of moderate resistance will be found among people in 
moderate circumstances. Proportional taxation is always 
found to be regressive taxation ; in other words, the power 
of resistance on the part of wealth is so great that it never 
pays its fair share. Tax-assessors fear to assess the wealthy 
as they do the poor, because the wealthy have great power 
to harm or help one. In no place in the United States are 
the wealthy properly assessed. Moreover, the various de- 
vices, like bond purchases, by which the wealthy escape, 
are not practicable for men of small means, as they would 
be too expensive. Again, those who have large wealth are 
better informed on business methods and tax-dodging 
schemes. This does not imply that any one class is either 
better or worse than another. It is a question of the power 
of resistance. The poor people and the people in moderate 
circumstances would often be but too glad to imitate conduct 
which they condemn, had they the power. It may be urged 
that a nominally progressive tax would, after all, be no more 
than proportional in actual practice. Progressive taxation 
would be resisted so strongly that in a country where wealth 
is so powerful as with us, it is Utopian to think of it. It 
would arouse animosity and bad feeling if attempted, and it 
seems far better to confine ourselves to efforts to approxi- 
mate proportionality as nearly as possible. We shall be likely 
to fare best under this system. It appeals to the conscience 

1 From an excellent article on " Recent Experiments in State Taxa- 
tion," by Henry James Ten Eyck, in Popular Science Monthly for 
February, 1886. 



TAXATION OF INCOMES, 307 

of people, whereas progressivity does not at present appeal 
to the conscience of the majority of our people as just and 
fair. 

One objection frequently urged to progressivity, is that a 
progressive rate of taxation will sooner or later amount to 
confiscation ; that if you take one per cent., say, on incomes 
of $1000, two per cent, on incomes less than ^2000, and con- 
tinue to increase the rate, you must finally take one hundred 
per cent, or all. The fact that this objection is so frequently 
urged by political economists, does not do credit to their 
mathematical ability. If the rate of taxation increases only in 
arithmetical ratio, while the income increases in geometrical, 
the rate may progress and yet never be high. If the rate 
increases as i, 2, 3, 4, 5, and income taxed as ^1000, ^2000, 
^4000, $8000, the rate would not be fifteen per cent, until 
the income exceeded eight millions of dollars, and it is safe 
to say that never in the world's history would it reach twenty 
per cent. 

It is frequently urged that the opposition to an income 
tax is so strong that it is out of the question to talk about it. 
This is an unwarranted assumption. There is a very general 
feehng in favor of it. I heard from four professors of politi- 
cal economy about my report as tax-commissioner, and 
every one expressed himself favorably in respect to the in- 
come tax. I was invited to appear before representatives of 
the Board of Trade, of the Corn and Flour Exchange, and 
of the Merchants and Manufacturers' Association, of one of 
the largest cities in the United States, to explain my system 
of taxation, and not one objected to the income tax. One 
prominent member said : " While I am not prepared to 
turn it down, I want more time to think about it." Another 
said : " You know, gentlemen, I never objected to the federal 
income tax. It always seemed to me right that a man 



308 TAXATION AS IT SHOULD BE. 

should pay in proportion to his income." A third prominent 
business man came to me at the close of the meeting to say 
that he thoroughly indorsed my position. This personal 
occurrence is cited because it is believed to be worthy of 
notice. For one who has objected ' to the income tax 
feature of my report to the Maryland legislature, nine have 
expressed approval of it. When tax reformers begin tc 
turn their attention to the income tax, they can carry every- 
thing before them, and one-tenth of the effort which has 
been expended on personal property taxation would suffice 
to build up a satisfactory machinery for assessing and collect- 
ing an income tax. 

The following is a quotation from a letter from a county 
court judge of New York : — 

" I have examined with much interest your ' Supplemental 
Report ' to the general assembly of Maryland on ' Taxa- 
tion.' I most fully approve of the scheme recommended 
therein. The suggestion that real estate should not be taxed 
for state revenue, but for local revenue only, is new to me. 
On such consideration as I have had time to give the ques- 
tion, it seems to me wise, and it would obviate in a large 
degree one of the most serious difficulties we have in secur- 
ing a just equalization of taxation upon real estate in the 
state of New York. 

" I have been for many years most earnestly in favor of a 
graded income tax, with a ^500 exemption. I should not 
object to a $600 exemption. I also believe in a graded 
inheritance tax on all legacies, devises, distributive shares 
and successions exceeding I500 ; also a tax upon income of 
corporations, especially those corporations whose business 
secures 'increasing returns,' and with reference to which 
the laws of competition cannot have free play. 



TAXATION OF INCOMES. 309 

"All other revenues, it seems to me, should be incidental, 
and not laid with direct reference to revenue." 

The following quotation from a letter, like the previous, 
deals with other parts of this work as well as the present 
chapter, but it is better to put it in one place than to 
separate it into parts according to topics. It is of interest 
on account of the subject-matter, and also on account of 
its author, who now occupies a distinguished position, and 
was once a justice of the supreme court of one of our larger 
states : — 

" Accept my thanks for a copy of your ' Report upon 
Taxation.' Some of its suggestions are new, others have 
been subjects of speculation with me during my life. With 
your criticism upon the attempt to tax personal property, 
including money and credits, I fully agree. It is always a 
failure, oppressive to the honest, and very seldom reaching 
the dishonest. But my mind is not settled as to the expe- 
diency of abandoning it altogether. I also agree with you 
as to the policy of taxing incomes. It is the fairest tax that 
can be devised, provided the amount of the income can be 
reached. Here is the rub, and it seems to me that you 
hardly appreciate the difficulty. ... I should like to see 
such a tax made part of our system, and I would not object 
to such inquisitorial machinery as should secure the truth, 
so hard to be reached. And I would make positive that 
which you only suggest, that is, I would make the tax cumu- 
lative. While revenue is the object of taxation, still other 
things must be taken into consideration. All governmental 
power should be so exercised as to promote the general 
welfare as well as the immediate object of the power. I 
look to the taxing power as furnishing the means to partially 
remedy the great evil of vast accumulations of property. 
As it iS; those who thus accumulate pay comparatively less 



310 TAXATIO.V AS IT SHOULD BE. 

taxes than their poor neighbors. A small tax may be, often 
is, oppressive to the latter, while a large one in no way dis- 
commodes the former. A tax of ^10,000 upon an income 
of $50,000 is no burden whatever to the tax-payer, while it is 
a blessing to the community in discouraging such accumula- 
tions. I would assess the cumulative tax upon land, upon 
incomes, upon everything that is taxed ; and I would treat 
everything made by stock- gambhng as so much income. 

" Have you ever thought of the propriety of a tax upon 
rents as such? Our land titles are in theory feudal, in 
England actually so. The lord paramount divides up the 
land among the great lords upon condition of miHtary ser- 
vices and payment of dues. These lords divided it among 
their followers upon similar conditions. This return of ser- 
vices, and these payments were the rent, — the ?'edditus, — 
and were the only consideration for the land thus given 
them. The early struggles between the king and nobles 
pertained chiefly to rent, the latter seeking to hold the land 
and get rid of the rent, while the former sought to increase 
uncertain burdens. The result has been, in the develop- 
ment of the English constitution, that the great holders have 
got rid of their obligations entirely, own the land discharged 
of rent, while the common people who hold under them 
have had their rent doubled, quadrupled, and m.ore. As 
knight service and other dues can no longer be rendered 
and paid, in order to carry out the spirit of the original gift, 
every great landlord should pay into the king's treasury one- 
fourth to one-half of all the rent he collects. That would 
be his feudal due, for that which he holds free from the dues 
he contracted to pay. The same historical reasons do not 
exist with us, but the state is the lord paramount, owns the 
allodium of all lands, and has a claim upon the soil over and 
above the right to tax all property. I can now only hint at 



TAXATION OF INCOMES. 311 

the matter, but it seems to me that there is a reason for 
taxing rents, incomes from land not depending upon the 
labor of the owner, not applying to personal property or to 
income derived from labor or business. 

" All public works in which the people are all interested 
should be owned by the state, the United States, or the 
municipality. Much could be said upon this. 

" You present strong reasons for separating the state from 
local revenue, and in some states it can be done. If in- 
comes are taxed, it perhaps can be in all. There is certainly 
great injustice done by unequal valuations of the same kind 
of property." 



CHAPTER VIII. 

TAXATION OF INHERITANCES AND BEQUESTS. 

INHERITANCES will be used in this chapter to denote 
property which comes to one from the estates of de- 
'cedents by course of law, without a will by former owner. 
Property of any kind which comes to one by last will or 
testament, or by gift to take effect after the death of the 
giver, will be denoted by the word bequest. Bequest has 
reference to testates and to testate estates ; inheritance, to 
intestate estates and to intestates. This is a distinction by 
no means universally observed, but precedent is found for it 
in John Stuart Mill's treatise on " PoHtical Economy," ^ and 
it is a convenient distinction for present purposes. 

"The institution of property," says Mill, "when limited 
to its essential elements, consists in the recognition in each 
person of a right to the exclusive disposal of what he or she 
has produced by his or her own exertions, or received, either 
by gift or fair agreement, without force or fraud, from those 
who produced it. The foundation of the whole is the right 
of producers to what they themselves have produced." ^ This 
includes the right of bequest, but not the right of inheritance. 
What right have I to property which another produced and 
which he did not leave to me by mil ? I have only such 
legal rights as the law .gives me. I have no moral rights 
exceeding those which the law may give me, unless I had 

1 Book II., Chapter II. 

^ Mill, Book II., Chapter II., § i. All references are to the una- 
bridged edition. 



INHERITANCE AND BEQUESTS. 313 

some moral claims upon the owner of the property while he 
was still alive. A wife has both a legal and a moral claim, 
and so has a minor child. A child who has attained his 
majority has no necessary legal claim, wherever the law allows 
a parent to will his property away from his children. If that 
law which prevails in America is not in accord with the re- 
quirements of ethics, then a child after attaining his majority 
has an ethical claim. Part of the property of a husband 
must go to the wife, by the law of American states, and part 
of it must, in most countries, go to children. The law 
nowhere compels a man to leave part of his property to 
collateral relatives, and they can have a claim only when 
property is bequeathed to them, or when in absence of a will 
the law gives it to them. What moral claim has a collateral 
relative in absence of any will ? There may be some ethical 
obligation on the part of an owner of property to assist near 
relatives, not in direct line of ascent or descent, although it 
is not usually recognized. It is in rare cases that it extends 
even to great-uncles and great-aunts and second cousins. 
Yet it sometimes does extend so far, and a person often has 
a real interest in a father's or a mother's aunt or uncle or 
first cousin. No more distant relative can, in our days, when 
families are scattered and ties of distant relationship amount 
to nothing, institute any ethical claim to the estate of an 
intestate decedent. A third cousin, living in a foreign 
country or even in a distant part of the same country, 
has less moral right to the property of a decedent than the 
members of a community among whom he acquired it, and 
whose diligence, whose co-operation, and whose observance 
of law and order made its accumulation possible. No 
purpose is subserved by allowing distant relatives to share 
an intestate estate. It often results in disgusting squabbles 



314 TAXATION AS IT SHOULD BE. 

and costly litigation, and in the end simply gives a few 
privileged persons a chance to lead an idle and useless life. 

It is therefore desirable to abolish altogether the legal right 
to inheritance of any collateral relative beyond great-uncle 
or aunt, great-nephew or niece, or second cousins. When a 
person desires that any more distant relative should enjoy 
part of his property he should make provision therefor by 
bequest. 

The question may also be raised, What right has a man to 
say what shall be done \^dth this earth, or anything which 
pertains to it, after he is dead ? Surely the earth belongs to 
the living, and not to the dead. A man's wishes respecting 
his wife are of no validity after his death. She is free from 
his law then. He may desire her to remain a widow, but the 
law gives no effect to his wishes. His control over his 
children is also very limited. There has, however, been a 
tendency to forget that private property exists for man, and 
not man for private property ; and to regard a man's wishes 
respecting property which he once owned, as sacred, even 
after death. It is granting a great deal to allow any individ- 
ual to fence in a portion of the earth's surface, and during his 
lifetime to say : "This is mine ; I shall do as I please with it. 
No one else shall, unless I will, derive any benefit there- 
from." It has, however, been found expedient to grant this 
right. What, however, shall be said of those who go further 
than this, and give to me the right to say, for all time, what 
use shall be made of a portion of the earth's surface, because 
I once owned it ? This is absurd, and such an undue exten- 
sion of the right of private property endangers the entire 
institution, giving a handle to those who would overthrow it. 

I cannot grant that the dead have any proprietary rights 
whatsoever. The living have rights. Not the dead man has 
rights ; but his wife, his children, his relatives, and the com- 



INHERITANCE AND BEQUESTS. 315 

munity. Nowhere may a man say absolutely what shall 
become of his property. His wife has claims which he can- 
not disregard. In France, his children may claim the whole 
of it save what would be equal to the share of one child. 
The right of bequest has for many ages in many parts of the 
world never existed at all. A liberal right of bequest has 
been granted in recent times, but the only reason therefor 
is public expediency. This right must be limited. 

It follows from this that the right of inheritance should be 
extended in some instances and abridged in others. The 
law in American states does not recognize sufficiently the 
moral claim which a man's children have upon his prop- 
erty, a claim founded in the fact that he has called them 
into being and ought therefore to put them in a position 
to lead a happy and useful life. This would not necessarily 
carry with it the right to inherit millions, least of all in the 
absence of a will, but of enough to give one a reasonable 
prospect of a happy, useful, and successful life, and this 
amount would vary with one's rank and station in life. 

It may further be said that those who receive property by 
inheritance or bequest require in special degree the assist- 
ance and protection of government ; that the orderly devo- 
lution of property in consequence of a death is impossible 
in the absence of a government which maintains law and 
order. 

Inherited money is an income without labor on the part 
of the receiver, and may properly be made liable to a tax 
even in excess of the ordinary income tax. It is a tax 
which can be collected easily, and this is one reason for 
such a tax. 

It is in consequence of these, and other reasons, that 
taxes have been laid on inheritances and bequests, and it 
is proper that collateral inheritances should be taxed at a 



316 TAXATION AS IT SHOULD BE. 

higher rate than direct inheritances ; inheritances, that is, in 
direct hne, either ascending or descending.-^ 

The Maryland law taxes collateral inheritances over ^500, 
at the rate of two and one-half per cent. It is stated in 
these words in a " Synopsis of the System of Taxation for 
State and Municipal Purposes in Maryland," prepared by the 
Tax Commission of 1881 : — 

"The real estate, personal estate, mixed property, money, 
public and private securities located in this state and passing 
from an owner dying, seized thereof, or transferred by deed, 
to take effect in possession, after the death of the grantor, 
to any person or corporation, in trust or otherwise, except 
to or in trust for use of father, mother, husband, wife, or 
children, and lineal descendants of grantor or intestate, sub- 
ject to a tax of two and one-half per cent, on every ^100 of 
the clear value of such estate, provided that no estate under 
^500 value shall be subject to this tax.^ 

" When property liable to this tax is other than money or 
real estate, the tax thereon shall be paid on its appraised 
value, and the executor or administrator shall have power to 
sell the same under the order of the court, if necessary to 
pay such tax.^ 

" When real estate is subject to this tax, the same persons 
appointed to appraise the personal estate shall be appointed 
to value all the real estate of the decedent in this state, and 
this tax shall be paid upon such appraised value.* 

" Such tax shall be a lien on the real estate of the dece- 
dent from the time of his death.'^ 

1 Inheritance in direct ascending line, except father and mother, is, 
in Maryland, regarded as collateral. 

2 A. A., 1874, chapter 483, section 113; and A. A., 1880, chapter 44. 

3 A. A., 1864, chapter 483, section 115. 

* Section 117. Section 124. 



INHERITANCE AND BEQUESTS 317 

"Whenever any estate, real, personal, or mixed, of a 
decedent shall be subject to this tax, and a life-estate or 
term of years, etc., is given to one party, and the remainder 
or reversion to another, the orphans' court to determine 
what portion of the tax the respective parties in interest 
shall pay." ^ 

New York and Pennsylvania have a five per cent, tax on 
collateral inheritances. 

Maryland has a tax which in its practical operations 
amounts to a tax on direct inheritances. It is a tax of one- 
tenth of all commissions allowed executors and administra- 
tors ; and legacies, left executors by way of compensation, are 
to be reckoned in the commissions. Executors of non-resi- 
dents owning any state or city stock, or stock of any corpo- 
ration, are liable to the tax just as domestic executors are. 
This tax yielded in 1887 ^50,854.47, whereas the collateral 
inheritance tax in that year yielded only ^45,597.14. 

It seems to me that a distinction should be made between 
large and small collateral inheritances. The Maryland tax is 
sufficient on small estates, but on estates exceeding ^20,000 
in value the New York and Pennsylvania rate is not too 
high. It might be proper to raise the rate of the tax to ten 
per cent, on estates in excess of ^50,000. This tax should 
be laid on all collateral inheritances and bequests ; but the 
right of distant relatives to receive intestate estates should, 
as already stated, be abolished altogether, and these then 
allowed to fall to the state by escheat. 

A direct inheritance tax is generally regarded as a proper 
accompaniment of an income tax ; and when moderate in 
amount is a just tax, which can always be assessed fairly, 
and collected without difficulty or considerable expense. 

As the income tax contemplates an exemption of ^600, 

1 A. A,, 1880, chapter 455. 



318 TAXATION AS IT SHOULD BE. 

it is proper that the direct inheritance tax should exempt 
a sum, which, at five per cent, interest, will produce S6oo, 
or ^12,000. In my report to the Maryland legislature I 
recommend, therefore, that all direct inheritances exceeding 
^12,000 be taxed on the excess of the inheritance over said 
sum at the uniform rate of one per cent. 

Although I am not prepared to recommend it at present, 
it would be in accord with the principles of Jeffersonian 
democracy, and also with the teachings of some of the best 
modern thinkers on economic and social topics, to grade 
the tax, making it two per cent, on estates from $100,000 
to $200,000 ; three per cent, on estates from $200,000 
to $400,000 ; four per cent, on estates from $400,000 to 
$800,000 ; five per cent, on estates from $800,000 to 
$1,600,000 ; and so on, the tax reaching ten per cent, in 
case of estates of $50,000,000, and the progression termi- 
nating therewith. It would seem desirable that the higher 
rates should in each case be charged only on the excess 
above the sum taxed at the lower rate. Thus, if the tax is 
tvvo per cent, on estates from $100,000 to $200,000, and 
three per cent, on estates from $200,000 to $400,000, the 
three per cent, should be charged only on $200,000, while 
$100,000 should be taxed tvvo per cent,, and $88,000 one 
per cent. 

This tax could embarrass no one, being only $10 on 
$1000, and in case of an estate of $20,000, equalling only 
$80, as only $8000 of the excess over $12,000 would be 
taxed. It answers the requirements of every canon of taxa- 
tion. 

One of the principles which controlled the action of Jef- 
ferson and other founders of this republic, was the abolition 
of hereditary distinctions and privileges, and their aim was 
to force each one to rely on his own exertions for his own 



INHERITANCE AND BEQUESTS. 319 

fortune, desiring to give to all as nearly as practicable an 
equal start in the race of life. 

It has also been urged by others that one of the most 
dangerous tendencies of our times is the increasing aggre- 
gation of wealth in a few hands. This scheme is a slight 
corrective, which is in harmony with the spirit of our 
institutions. 

Other far more radical measures have been proposed by 
conservative men. A committee of the Illinois Bar Associ- 
ation recently reported favorably ^ on a proposition to limit 
absolutely the amount any one child may inherit to ^500,000^ 
and the amount any one else may inherit from a single 
estate, to $100,000. In their report they say: "There 
never was a time in the history of the world when the power 
of money in skilful hands was so great as the present ; or 
when the use of that power was made so conspicuous. The 
new forces at its command are augmenting it with wonderful 
rapidity. Already the sceptre has passed from the sword 
to the counting-house. The fact that one individual m.ay 
monopolize hundreds of milhons of the wealth of the nation 
and pass it at last by will to another, with all its possibihties, 
is a growing source of uneasiness among all classes of 
society." I will express no opinion on this quotation, but 
simply remark that rightly or wrongly, it was precisely this 
sort of thing which the founders of our republic tried to 
prevent in America.^ 

With the inheritance tax it is proper to connect measures 
for the better control of income tax returns. A suitable 
provision is a law laying a penalty on the estates of dece- 

1 January, 1886. 

2 The limitation of the right of persons to dispose of property by 
will, is ably advocated by Judge E. A. Thomas, of Pennsylvania, in the 
Forum for December, 1886, 



320 TAXATION AS IT SHOUID BE. 

dents V ho have manifestly made false returns, equal to five 
times the estimated amount of income tax fraudulently 
withheld at the time of the last payment of the income tax.^ 

1 The special student will do well to read on this topic, in addition. 
to the hterature mentioned in Part I., Judge Thomas' article "About 
Wills and Testaments," in the Forum for December, 1886; Mill's 
"Political Economy," unabridged edition, Book II., Chapter II,; 
" Erbschafts-steuer und Erbschafts-reform," by Professor von Scheel, 
Jena, 1877; and Jacobson's " Higher Ground," Chicago, 1888. Part IV. 
contains the New York law for the taxation of collateral inheritances, 
the report of the law reform committee of the Illinois Bar Association, 
on " Reform in the Statutes of Descent and Wills, so as to insure a 
more General Division of Property among the People," and the bill of 
this committee which was introduced in the Illinois legislature. The 
legislature is competent to decide what use shall be made of the pro- 
ceeds of the tax on bequests and inheritances. It may be used for 
general or special purposes. It might be w^ell to set it apart for some 
such purpose as the improvement of public schools, and perhaps also 
of public highways, both of which are in abominable condition in 
nearly all rural districts in the United States. Schools and streets in 
cities also stand in need of improvement. 



CHAPTER IX. 

BUSINESS TAX. 

BUSINESS should as a rule be left as free in its move- 
ments as possible, and in view of sharp interstate com- 
petition, the burden of taxation should be made as hght as 
possible. Our commerce and our manufactures should be 
fostered, and on account of exemptions in rival ports, our 
shipping deserves special consideration, for it will leave us 
otherwise. Registered vessels engaged in foreign trade 
might, it would seem, with propriety be exempt from all 
taxation on their value, and be taxed only on earnings, as is 
the case with this shipping in Rhode Island and New York, 
and as was recommended in Connecticut by the tax com- 
mission's report of 1887. Vessels engaged in coastwise 
trade appear to require less aid, as they are not subjected to 
foreign competition, but care should be taken not to burden 
them too heavily. Perhaps some plan for taxing them on 
earnings might also be devised. It is to be observed that 
in New York City and elsewhere, although the laws impose 
taxation upon business, the actual practice does not. 

The last message of Hon. A. S. Hewitt to the New York 
city council, dated Jan. 10, 1888, deals with the subjects of 
taxation, and is important for us in three respects. First, 
it reiterates what has been said about the injustice of our 
system of taxation. "The estates of widows and orphans 
and wards in chancery pay the full amount of taxation re- 
quired by law, although in most cases it can be least afforded. 



322 TAXATION AS IT SHOULD BE. 

while ' bloated ' capitalists either entirely escape taxation or 
compromise for a very inadequate sum. This condition of 
affairs is scandalous." Second, it advocates exemption of 
personalty in order to build up the business of New York. 
It says : " We are now the centre of exchanges in the 
Western Continent, but in a few years we should be the 
clearing house for the commerce of the globe." Business 
men of Maryland and other states should understand that 
there is a deliberate attempt to draw business to New York 
by low taxation. Third, it is plainly stated that all attempts 
to enforce the system thoroughly in New York have been 
practically abandoned, all law to the contrary notwithstand- 
ing. In speaking of complaints about inadequate assess- 
ments of personal property which were made with full knowl- 
edge of their inadequacy, Mr. Hewitt says : " Under ordi- 
nary circumstances it would have been my duty, on being 
satisfied of these facts, to have removed the commissioners 
complained of from office. But I could not shut my eyes 
to the fact that the existing laws had never been executed, 
and there was no difference of opinion among those who had 
studied the question, that they never can be executed as 
they stand in this city." 

Our business men in Baltimore must compete with mer- 
chants in adjoining states even for retail trade. The value 
of real estate depends upon the condition of business, and 
unless business flourishes the laboring population cannot 
find employment.^ 

The city of Montreal lays a tax on business, which is a 
percentage on rent, and it works very satisfactorily. The 
percentage is seven and one-half, and merchandise is ex- 
empt. Intangible personal property is also exempt, and the 

1 " The trade of a district may be seriously imperilled if it has to 
bear disproportional rates." — Fawcett. 



BUSINESS TAX. 323 

system seems to give very general satisfaction. Real estate 
owners do not complain, because they realize that it helps 
to bring business to the city, and that that raises the value 
of their property. 

A tax of ten per cent, might advantageously be laid on the 
annual rental value of all stores, offices, manufacturing estab- 
lishments, and other places of business ; and merchandise, 
plant, and furniture of these places, be relieved of all other 
taxation. This tax, imposed by general law, could be 
advantageously left to the local political units to be used for 
local purposes. Should the needs of the state require it, 
however, the local political units might be required to turn 
over to the state treasury part of the revenue therefrom. 



CHAPTER X. 

TAXATION OF RAILROADS OPERATED BY STEAM, 
AND OTHER CORPORATIONS. 

RAILROADS. 

A DISTINCTION should be made in any rational 
scheme of taxation between taxes on corporations 
engaged in agriculture, manufactures, and commerce, and 
those which enjoy natural monopolies. The latter are quasi 
public in nature. There is no reason why ordinary business 
corporations should be taxed differently from individual or 
partnership business. Both can be taxed on the rental 
value of their places of business. 

It is advantageous in taxing corporations of a quasi pub- 
lic nature to tax them in proportion to gross revenues, as 
steam railroads are taxed in Wisconsin, Maryland, Vermont, 
and elsewhere. It is never desirable to tax any corporation 
on net revenues, as it leads to fraud. Railroads in some 
states are required by charter to lower charges when div- 
idends exceed a certain per cent., but I believe no case is on 
record where this per cent, has been reached. Stock is 
watered, bonded debts created, combinations made, and 
high salaries paid, and thus apparent net revenues kept 
down. It sometimes happens that the officers of corpora- 
tions, ordinary corporations as well as others, get control 
of the corporation and divide nearly all profits among them- 
selves. A tax official of one city told me of a corporation 
whose president, secretary, and treasurer divided all profits, 



TAXING CORPORATIONS. 325 

in the shape of salaries among themselves ; so if profits 
amounted to $40,000, the president would receive a salary 
of $20,000, the secretary one of $10,000, and the treasurer 
one of $10,000. The taxation of gross revenues is simple 
and easy, and amounts to a tax on the value of the property. 
A case like this has come to my notice. A street railroad is 
bonded for a sum equal to all the capital invested. The 
share capital represents no actual investment at all. Inter- 
est is paid on bonds, all the capital invested ; yet because 
there is no surplus for dividends on shares, the officers of 
the corporation insist that there are no profits ! It should 
be remembered thai; stocks and bonds added together repre- 
sent the actual investments. The percentage of tax on 
gross revenues should be high enough to tax all the prop- 
erty invested properly, and the stocks and bonds should be 
exempted from taxation. As real estate can best be treated 
by local authorities, so state officials can best deal with cor- 
porations like railroads operated by steam, telegraphs, tele- 
phones, sleeping-car and express companies, and these ought 
to be handed over to the state to be taxed, for state pur- 
poses only. This would simplify administration wonderfully 
and put an end to a vast amount of litigation and corruption. 

The Wisconsin method of taxing railroads has been 
described in a previous chapter. The recommendations of 
the Maryland Tax Commission are that, in addition to the 
regular state and county taxes, railroads pay a special license 
tax as follows : — 

" The license rates which we suggest are one per cent, on 
the first $1000 a mile of gross earnings, or on the total earn- 
ings, if they are less than $1000 a mile. Two per cent, 
on the first $1000 or part thereof above $1000 per mile. 
Three per cent, on the first $1000 or part thereof above 
$2000 per mile. Four per cent, on the first $500 or part 



326 TAXATION AS IT SHOULD BE. 

thereof above ^3000 per mile ; and five per cent, on all 
gross earnings in excess of $3500 per mile." 

The report then continues as follows : — 

" The reasons for increasing the per cent, as the earnings 
per mile are greater is, that with the increase of gross earn- 
ings per mile, the proportion of the net profits of the roads 
increases very rapidly ; that is, as the business of a road 
increases, its net profits increase much more rapidly than its 
operating expenses, because the heaviest expenses of the 
road are those which must be paid whether the business is 
great or small. The increase of such expenses is compara- 
tively slight when the business increases. 

" The rates we propose are suggested after a comparison 
of the gross earnings of railroad companies in Maryland 
with their net earnings. We believe they will require that 
the companies pay about their fair contributions to the pub- 
lic treasury, and we are convinced they will not be unduly 
burdensome to the companies." 

The Vermont, Wisconsin, and Mississippi plan of taxing 
gross revenues only, and by state authority, seems to me pref- 
erable. If the percentage of gross revenues just given is 
not sufficient to compel the railroads to pay their fair share 
of the taxes, it can easily be raised. 

The taxation of railroads in Vermont and Mississippi is 
described in these words in the " Maryland Tax Commission 
Report": — 

" The present statute of the state of Vermont, which has 
been in force since 1882, is growing in favor, and, although 
its railroads have less opportunity for large business and 
handsome profits than the more flourishing of our roads, the 
tax imposed is somewhat higher than we suggest, being two 
per cent, on the first $2000 a mile, three per cent, on the 
third ^1000, four per cent, on the first ^1000 above ^3000 



TAXING CORPORATIONS. 327 

per mile, and five per cent, on all earnings above ^4000 
a mile. 

"The revenues derived by Vermont from its taxes on 
corporation franchises and privileges are, and have been for 
years, sufficient to meet all expenses of the state govern- 
ment; and no state tax is imposed upon property, thus 
leaving to the counties and other local bodies all revenue 
from that source.^ 

" In Mississippi a license-privilege tax is imposed by the 
state on all railroads. The statute fixes the sum per mile 
required of each road, which varies from twenty-five dollars 
per mile on the Mobile and Northwestern Railroad Com- 
pany, to one hundred and twenty-five dollars per mile on 
the Mobile and Ohio and other companies. The license tax 
imposed by the Act of 1884, was increased twenty-five per 
cent, by the Act of 1886. This tax is in heu of all state 
and county taxes, and two-thirds of the receipts are distrib- 
uted to the respective counties through which the several 
roads run, in proportion to the number of miles of road in 
each county ; but cities and incorporated towns may impose 
the same rate of tax on railroad property within their 
limits as is levied upon all other property for municipal 
purposes. 

"Hon. George M. Govan, secretary of state of Mississippi, 
says, in response to an inquiry from this commission : ' The 
railroad tax works well ; it brings a good income into the 
state. Of course the railroad companies object to it, but 
they pay it promptly.' " 

The tax varies from time to time. The general assembly 
fixes a rate per mile which it thinks the railroads ought to 
pay. It is manifestly better to have a more constant tax, 

1 Report of Illinois Revenue Commission, page "x.," 1886. 



328 l^AXATION AS IT SHOULD BE. 

like a percentage on gross revenues, which will itself vary 
according to the prosperity of the railroad. 

The recommendation of the Maryland commission for the 
taxation of certain other corporations is as follows : — 

" CORPORATIONS. 

" After a careful consideration of the subject of taxation of 
corporations we have come to the conclusion that the most 
practical system under our existing constitution, as well as 
the most practical, in view of our circumstances and envi- 
ronments, is that in operation in Pennsylvania, called in their 
financial reports the tax on capital stock, coupled with a 
gross receipts tax on those corporations which enjoy special 
privileges under the franchises held by them through grant 
by the state, or which they are permitted to exercise by 
sufferance of the state, as in the case of corporations of 
other states, permitted by comity to carry on business in this 
state. 

" The tax called in Pennsylvania the tax on capital stock 
is, practically, a tax on the net profits of corporations, laid in 
such manner as to avoid the difficulty which will ordinarily 
arise from the effort to tax net earnings, consisting in the 
facility with which such a tax can be evaded. 

" The plan successfully employed in that state is about as 
follows : If the dividend or dividends made or declared by 
a corporation during any year amount to six, or more than 
six per cent, upon the par value of its capital stock, then the 
rate would be half a mill upon the capital stock for each one 
per cent, of dividend so made or declared — that is, the cor- 
poration would pay a tax equal to one-twentieth part of the 
dividend, or equal to five per cent, upon the dividends ; if 
no dividend has been made or declared, or if the dividend 
has not amounted to six per cent, upon the par value of the 



TAXING CORPORATIONS. 329 

capital stock, then the tax is at the rate of three mills upon 
each dollar of a valuation of the capital stock made accord- 
ing to law.^ And it is required that any profit made by a 
company, and added to its sinking fund without a division 
among its stockholders, shall be treated as dividends divided 
among the stockholders, and included as a part of the basis 
upon which said tax is estimated. 

" We recommend a similar tax in this state, excepting, 
however, railroad companies and banks from its operation, 
because we have already provided for taxing railroads fully, 
and because it would not be practicable to impose such a 
tax on national banks. 

" Every transportation — telegraph, express, palace, and 
sleeping-car company — is subjected in Pennsylvania to an 
annual tax of eight-tenths of one per cent, upon its gross 
receipts. This tax is in addition to the tax on the capital 
stock above referred to. 

"We recommend that a gross-receipts tax be imposed 
upon telegraph companies at the rate of two per cent. ; and 
three per cent, upon telephone, express, title insurance, 
safety deposit and trust companies, parlor-car and sleeping- 
car companies ; and one per cent, on domestic insurance 
companies ; leaving the tax as at present, one and one-half 
per cent, on the gross receipts of foreign insurance com- 
panies. These taxes will, of course, be in addition to the 
tax measured by the companies' dividend.^ 

^ "The valuation of capital stock now made by our state tax com- 
missioner would answer for the cases of corporations whose dividends 
did not amount to six per cent, per annum." 

2 " The state of Vermont imposes the following gross-receipts taxes : 
Two per cent, on the gross amount of premiums and assessments col- 
lected by insurance companies, whether home or foreign, and one-half 
of one per cent, on all surplus over and above the necessary reserve; 
but the value of the real estate owned by the company is allowed to 



330 TAXATION AS IT SHOULD BE. 

"The reasons for a special gross-receipts tax upon the 
companies named are obvious. They enjoy large emolu- 
ments, which they are only capable of realizing by reason 
of the grant of corporate franchises from the state, or the 
permission to exercise such franchises in the state. They 
collect large sums of money from the people of the state, 
and, with the exception of the insurance companies, they 
are, for the most part, absolute monopolies with no com- 
petition whatever, and the power to establish their own 
charges without restraint or appeal, and enrich themselves 
at their own pleasure ; and in the case of some of them, 
with a comparatively small outlay of capital. It is true 
that express companies may be said to have, in a limited 
degree, competition with the railroads over whose lines they 
run, but this can scarcely be called a real competition, be- 
cause the character of the business transacted by each for- 
bids much encroachment on the part of the other ; and if 
such encroachment takes place, it is most likely to be by 
the express company upon the business of the railroad 
company." 

The Pennsylvania system of taxation of net revenues as 

be deducted from the surplus before payment of one-half per cent, is 
required, but not from the gross receipts. A tax of one-half of one per 
cent, upon the average amount of deposits and accumulations in the 
savings banks after deducting the value of the real estate owned by the 
bank. One per cent, upon the average amount of deposits in every 
trust company, including moneys or securities as trustee under order 
of court or otherwise, but no other taxes than those just mentioned are 
imposed upon deposits or accumulations in the savings banks or upon 
deposits in the trust companies; three per cent, on the gross receipts 
from express business, telegraph business, or telephone business; and 
two per cent, on the gross receipts of all steamboats, car, or transporta- 
tion companies (of course, this does not refer to steam railroads), but 
the real and personal property used in carrying on the operations of 
the companies so taxed are exempted from taxation." 



TAXING CORPORATIONS. 331 

well as of gross receipts, while striving after a nice adjustment 
of taxation, is, for reasons already mentioned, a practice not 
likely to work so well as a tax on gross revenues alone. 

I would prefer to raise the rate of the tax on gross rev- 
enues above that recommended by my colleagues, if neces- 
sary, and abolish the tax on dividends, rather than adopt the 
more complex system which they advocate. The taxation 
of insurance companies at two different rates, according to 
their location within or without the state, never appealed to 
me as desirable, although it is done in many states. Insur- 
ance companies are highly useful institutions, and they are 
liable to competition. It is impolitic to place any undue 
burden on them. The disposition to do this, sometimes 
manifested, ought not to be encouraged. It is better to 
insist upon stricter business methods on the part of insur- 
ance companies, and more adequate guarantees that they 
will fulfil their contracts as a recompense for their franchises, 
than to lay heavy taxes on them. They should, of course, 
be obliged to pay their proper share of taxes. In their case 
there is more reason for limiting taxation to a tax on divi- 
dends or net revenue than in the case of other corporations. 

The Maryland system of taxing incorporated banks works 
well. They are taxed by the state authority, namely, the 
state tax commissioner. The actual value of all shares is 
computed, and from this the assessed value of all real estate 
is deducted. The remainder is divided by the number of 
shares, and this gives the value of each share for purposes 
of taxation. The bank pays the tax to the state commis- 
sioner for the shareholders, and charges it to them. Banks 
often pay local authorities also and deduct the same from the 
dividends. The Maryland system requires all corporations 
to pay taxes on stocks and bonds, and to charge the tax to 
holders of stocks and bonds ; and this is an excellent and 



332 TAXATION AS IT SHOULD BE. 

economical plan which ought everywhere to be adopted. 
The Maryland Tax Commission speaks as follows of the 
Maryland system of taxing stocks and bonds : — 

"Among the most valuable classes of personal property 
are the capital stock in Maryland corporations, and the 
bonds or evidences of indebtedness of such corporations, 
and of the state ; as to these, there can be, and so far as 
state taxes are concerned is, no difficulty in discovering and 
valuing them and collecting the taxes thereon, because our 
system requires the corporation to pay the tax on the shares 
of the stock owned by the shareholders and a bondholders' 
tax upon its bonds. There has been considerable difficulty 
in the collection of local taxes upon the bonds of domestic 
corporations, because a similar provision of law has not 
existed as to local taxes on the bonds of corporations. This 
we propose to remedy by one of the amendments suggested 
by this commission." 

There is everywhere difficulty about the taxation of unin- 
corporated banks, and in some states, notably in Ohio, there 
has been much complaint on account of the discrimination 
against state and national incorporated banks. The unin- 
corporated banks return little or no capital, and the private 
bankers, as those are called who are unincorporated, escape 
the personal property tax by devices already sufficiently 
elaborated. This is a grievous injustice, and if no other 
way can be devised to tax all bankers alike, it would seem 
perfectly proper to compel incorporation for all engaged in 
a banking business. Possibly practical bankers might devise 
some other plan whereby private bankers could be com- 
pelled to advertise the full amount of capital employed, and 
to pay taxes on it like incorporated bonds. Public policy 
does not consist in discouraging national banks, — the best 
and safest banks which we have. 



TAXING CORPORATIONS. 333 

It might be well to add a small income tax, or a tax on 
dividends, as in Pennsylvania, in order to compel banks 
doing an extraordinarily remunerative business to pay in 
proportion to their ability. Any invidious taxation of bank- 
ing institutions is bad poHcy and injurious to the economic 
interests of the commonwealth. What has already been 
said on the proper treatment of natural monopolies should 
be remembered in connection with the matter in this 
chapter. 



CHAPTER XI. 

MISCELLANEOUS KINDS OF PERSONAL PROPERTY. 

TAXATION OF HOUSEHOLD GOODS. 

INSTEAD of entering a man's house to ascertain the 
value of furniture, plate, works of art, and other house- 
hold property, or compelling him to make a return of it, I 
would take the annual rental value of one's dwelling as a 
basis for taxation. It makes no difference whether a person 
occupies his own house or not. A dwelling has an annual 
rental value, and this can be readily assessed. This I would 
multiply by two, and take this sum as a basis of taxation to 
be taxed for local purposes at the rate at which real estate 
is taxed. This would be taken as an equivalent to a tax on 
the value of one's household effects, and if a person has 
accumulated works of art, books, and other valuable things 
in his home, which produce no income, it is a good thing 
that he is by this plan not compelled to pay a tax on them. 
It is well to encourage the cultivation of art and the beauti- 
fication of home. The proposal to tax a man hke Mr. 
Walters of Baltimore, who has accumulated the finest col- 
lection of paintings in the United States, on the full value of 
his art gallery, should meet with no favor whatever. Mr. 
Walters, in the formation of his gallery, has made himself a 
public benefactor. He helps to elevate the standard of 
taste and to cultivate the higher faculties, and the effects of 
this are felt sooner or later even by the poorest member of 
the community. 



MISCELLANEOUS PROPERTY. 335 

Taxation based on rent involves neither odious inquisition 
nor domiciliary visits. 

EXEMPTION OF CERTAIN KINDS OF PERSONAL PROPERTY. 

I would recommend that all unenumerated kinds of per- 
sonal property be not taxed, and under this head I would 
include mortgages, promissory notes, book accounts, simple 
contract debts, and other private securities. Those kinds 
of personal property which usually escape, and which are 
paid for the most part only by the unfortunate and extremely 
conscientious, I would exempt altogether from taxation. 
Thus the cunning and unscrupulous would not be placed at 
an advantage over their worthier or less-favored fellow- 
citizens. 

When it is attempted to tax this kind of property, it is 
generally found desirable to allow an exemption of debt, 
and by contracting debts for United States bonds, which 
bonds cannot be taken into account in state and local taxa- 
tion according to the decisions of our courts, it is possible 
for any person of means to evade taxes on such property. 
If a deduction from personalty on account of debts is not 
allowed, — and to prevent evasion of taxes it never has been 
allowed in Maryland, — it must work great hardship for 
those who obey the law. It must be remembered, also, that 
provision has been made in other recommendations for the 
taxation of all income, so that the universahty of taxation is 
secured. Taxation of gross revenues involves taxation of 
stocks and bonds, so there is no need to concern ourselves 
with them. 

The reports of the financial officers of the state of Mary- 
land, so far as I have observed, are not so made that it is 
possible to tell precisely how much is derived from each 
species of property ; but the Appeal Tax Court of Baltimore 



336 TAXATION AS IT SHOULD BE. 

has already been quoted in this report to the effect that the 
amount received from the property which I would exempt 
altogether, is, in Baltimore, comparatively small, even if not 
insignificant/ It is safe to say that the amount of such 
property outside of Baltimore, taxed, must be still smaller, 
as the city is the chief home of this kind of property. It 
is not necessary to add much to what ha's already been said 
on this subject. However, the question is often asked, Is it 
not better to reach even twenty-five to forty per cent, of such 
property than to let it all escape, and are not the burdens 
of real estate lessened by so much ? I unhesitatingly reply. 
No! 

First, it is not better to do injustice to the conscientious 
and helpless. A person need not be even a believer in 
revealed religion to expect that a nation or state will be 
prospered in proportion as its institutions are based on 
righteousness. This is the lesson of all history. 

Second, while the loss will be only small to the tax-payer, 
on account of the small returns, according to all testimony, 
of the property in question, — for not all personal property, 
but only the items mentioned are involved, — the gain from 
legal exemption would be great. The entire system of taxa- 
tion would be simplified and the labor of its administration 

1 The proportion of property of this sort taxed in Connecticut to the 
entire taxable basis in 1885, was only three and three-fourths per cent. 
The statistics in Part IV. will help the reader to see how small the 
amount of property which would hereby be exempted. The tax rate 
of New York City was $2.16 on the ^100 in 1887. Yet Mayor Hewitt 
estimates that if all personal property except bank shares were relieved 
of taxation, it would be necessary to add only one-sixth to the rate of 
taxation, as personal property now yields only about one-sixth of the 
total amount collected by taxation. It will be noticed that the recom- 
mendations of this book do not go so far as Mayor Hewitt, because 
they provide for the taxation of most kinds of property. 



MISCELLANEOUS PROPERTY. 337 

lessened. Now, any one who makes any investments in 
one of these kinds of personal property in question, knows 
that he will probably escape taxation, but on account qf 
uncertainty, he is obliged to ask a small premium to com- 
pensate for risk. I want to borrow money on a promissory 
note. Well, the lender could let me have it, we will say, for 
five per cent., if he were certain that he would not be taxed 
on money lent ; but as the tax-assessor may possibly find 
him out, he says : " I must have one per cent, extra on 
account of risk. You must pay me six per cent." Thus I 
come back to my former point. This species of property is 
practically exempt, as matters are, in most cases, but the 
benefits of the exemption are fully diffused only in case the 
exemption is legal. This is not something merely theoreti- 
cal, but something with which every experienced banker is 
famihar. Why do federal bonds sell for so high a premium 
as to produce less than two per cent, on money actually 
invested? Why do Maryland bonds at 3.65 find ready 
takers? It is because of tax exemption. Thus not the 
money-lender chiefly, but the tax-payers receive the bene- 
fits of this exemption. A business man who appeared before 
the Maryland Tax Commission, claimed that purchasers of 
state bonds paid the highest tax ; that the tax was deducted 
in advance from interest paid. Can any one dispute this 
proposition successfully ? If we, in Maryland, legally exempt 
this property of a high degree of mobility, we simply pro- 
mote its tendency to flow in to us, and on account of the 
greater supply, we can obtain its use for a smaller percentage. 
The case of real estate is, in this respect, it is manifest, 
entirely different, and so is the case of the most of the 
property which it is proposed to tax. 



338 TAXATION AS IT SHOULD BE. 



DIFFUSION OF THE BENEFITS OF EXEMPTION. 

The diffusion of the benefits of exemption from taxation 
can perhaps best be seen by a concrete illustration. Any- 
one who in Baltimore walks from Baltimore Street in a 
northerly direction out St. Paul Street or Calvert Street, 
beyond the boundary of the city, into the country, will notice 
a large number of houses newly constructed or in process of 
construction, and which are offered for sale or rent at far 
lower prices than such comfortable houses can be obtained 
for in any other great city in the American Union. It is 
not too much to say that a house in this section of the city, 
which can be obtained for ^25 a month — a pleasant, well- 
situated house — could not be obtained in any other city of 
the size of Baltimore in the United States for less than ^50 
a month. Now, why is it that so much building is going on 
and that houses are so cheap ? If any one thinks that the 
exemption of mortgages from taxation is not connected 
with it, a conversation with a practical builder or banker 
will probably disabuse him of this idea. As a matter of fact, 
savings banks would not and could not put their money into 
such improvements in Maryland if they were taxed. They 
do this now; but if mortgages were taxed, money now 
spent in Maryland would go to the West, just as thirty 
millions of dollars have recently left the state of New 
Hampshire. Who, then, gets the benefits of this exemption? 
They are diffused widely through the community. The 
workingman does, for he has more abundant opportunities 
for labor, and the taxation of mortgages would be a blow 
which: he would feel. In addition to this, to tax mortgages 
would tend to raise his rent. The real- estate man derives a 
benefit as he does from every improvement, for it raises the 



MISCELLANEOUS PROPERTY. 339 

value of his land. The farmer is also benefited in a better 
home market for his produce. The merchant is benefited 
in larger sales. If the money-lender is benefited at all, his 
advantage is not greater than that of other members of the 
community. 



CHAPTER XII. 

TAXATION OF SAVINGS BANKS, CHURCHES, AND 

EDUCATIONAL AND BENEVOLENT 

INSTITUTIONS. 

SAVINGS BANKS. 

THIS chapter contains a reprint of a part of my special 
report as member of the Maryland Tax Commission, 
with a few alterations and a few additional remarks. It is 
presented in this form because a concrete study is apt to be 
more effective, and because what is said of Maryland will 
apply equally well to other states. 

Savings banks are to be commended to the special con- 
sideration of the legislature. They ought to be fostered in 
every proper way as preventives of pauperism and crime, and 
as agents of civilization, elevating the people, rendering them 
truly independent, and increasing the wealth of the com- 
munity. Most of the capital they accumulate would either 
be idle, stored away in old chests or stockings in secret 
hiding-places, or would not exist at all, but would have been 
wasted, were it not for savings banks. Very few savings 
banks exist in the South, and their encouragement is much 
needed. Nearly all of their deposits are made by helpless 
or ignorant people not in a position to take care of them- 
selves. The president of the largest savings bank in Balti- 
more, which has sixteen millions of deposits, estimates that 
this is the case wdth ninety per cent, of the deposits of his 
bank. Over sixty per cent, of the depositors are females. 



TAXATION OF INSTITUTIONS. 341 

Two dangers should be avoided with special care. One is 
their suppression by taxation, the other is the removal of their 
capital from Maryland investments to the West by high 
taxation. We could ill afford to have thirty millions and 
more of capital leave us, and yet it would not be difficult 
to take it away from Maryland. 

It must be remembered that they are benevolent institu- 
tions, their officers, as a rule, serving without pay. 

Their entire exemption has been urged by their presidents, 
on the ground of pubHc policy. It has also been proposed 
to capitalize the interest they pay on such deposits over ^loo 
each, as are not covered by non-taxable securities, at six per 
cent., and to tax this at the usual rate. Whichever plan is 
pursued it would be perfectly proper, in view of the special 
favor, to exact of their directors more stringent safeguards 
than now legally exist for depositors, to make failure as remote 
a contingency as possible ; for the failure of a savings bank 
is a terrible calamity, and any one who brings it about by 
culpable negligence, speculation, or dishonesty, richly deserves 
the penitentiary. I say " more stringent safeguards than now 
legally exist," because, as a matter of fact, there is reason to 
believe that our Baltimore savings banks have adopted ade- 
quate safeguards voluntarily. It is precisely at such a time, 
when there is no reason for apprehension, that laws govern- 
ing savings banks should be made so strict in regard to pub- 
lication of reports and other safeguards as to do all that law 
can do to render them absolutely reliable. It may be proper 
to limit the amount of deposits of any one person in order 
that persons of means may not make an undue use of sav- 
ings banks. It is also desirable, either by license system or 
otherwise, to prevent the establishment of unsound institu- 
tions by irresponsible parties. Such savings banks in New 
York and elsewhere have done an immense amount of harm. 



342 TAXATION AS IT SHOULD BE. 

With those who would place a high tax on them, or even a 
higher tax than they now pay, I must disagree entirely ; 
although I readily admit that some of the depositors are 
wealthy persons, or the children of wealthy parents. While 
I appreciate the exaggerations of the press in regard to the 
interpretation of the fact that deposits are large and growing 
in our savings banks, I hold that any one who fails to give 
them credit for incalculable good is unacquainted with their 
practical workings. 

Through the courtesy of ^Ir. Francis T. King, president 
of the Provident and Central Savings Banks, I am enabled 
to give statistics in regard to the good work of the Baltimore 
savings banks. I present, herewith, a letter and a table which 
he was good enough to send me. 

" Dear Dr. Ely : I give the following information with 
pleasure. All but the Baltimore, Eutaw, and Central savings 
banks were established before the war. 

"I. There are ten savings banks in the city. 

"2. There are 105,172 depositors. ^ Deducting residents of 
the counties, churches, and benevolent associations, and deposi- 
tors who have accounts in more than one bank, the number 
would be reduced to 95,000, making a corresponding reduction 
in the total deposits ; the average would not be changed as given 
below. 

"3. The deposits average $297.75. 

"4. Since the rate of interest was reduced to three per cent., 
the comparatively helpless depositors are about ninety per cent., 
and that class of deposits about the same. There are now very 
few large deposits in the savings banks, — that is, deposits over 
$3000. Most of them belong to old depositors who began with 
small savings. Since the reduction of interest many of the 
larger deposits have been drawn to pay for small houses. 

1 Rather, number of accounts; but the difference between number of 
accoimts and number of depositors can hardly be very considerable. 



TAXATION OF INSTITUTIONS. 



343 



" I also submit for comparison the statistics of the banks for 
discount and deposit, national and state banks. 

" I. Number of national and state banks 24 

2. Capital ^13,788,760.00 

3. Individual deposits ;^2i, 677, 286.24 

4. Individual depositors (estimate) 21,142 

5. Average to each depositor ^1,025.37 

6. Deposits of other banks and United States govern- 

ment ^4,234,676.00 

" Yours very truly, 

"Francis T. King. 

"P.S. Sixty per cent, of the deposits in the savings banks 
are made by females in their own names or jointly with their 
husbands." 

STATISTICS OF SAVINGS BANKS IN BALTIMORE. 



DECEMBER 3I, 1887. 


NO. OF ACCOUNTS. 


FUNDS ON HAND. 


Savings Bank of Baltimore . . 


47,270 


^16,320,337 16 


Eutaw Savings Bank .... 


28,238 


8,913,752 6i 


Central Savings Bank .... 


12,658 


2,597,475 27 


Metropolitan Savings Bank . . 


2,949 


1,430,202 88 


German Savings Bank .... 


2,435 


927,307 83 


Maryland Savings Bank . . . 


1,415 


426,067 58 


Provident Savings Bank . . . 


5.421 


66,997 66 


Hopkins Place Savings Bank . 


980 


110,126 35 


Broadway Savings Bank . . . 


2,601 


301,351 81 


Border State Savings Bank . . 


1,205 


221,937 08 




105,172 


^31,315,556 23 



Average per depositor, ^297.75. 



Mr. King very properly says that " the motto of every 
savings bank should be safety ; the rate of interest is a sec- 
ondary question." 



344 TAXATION AS IT SHOULD BE. 

CHURCH BUILDINGS. 

The question as to the propriety of taxing church edifices 
is one which must be discussed from broad gi'ounds of pub- 
lic pohcy. If it promotes the general welfare to exempt 
church buildings from taxation, it is perfectly proper to 
do so. 

There are two questions to be asked : Do churches pro- 
mote the intellectual, moral, and economic interests of the 
people ? Will they be aided in their work by the exemption 
of the property, used purely for religious purposes, from tax- 
ation? All states except California answer both of these 
questions in the affirmative. While I might not be prepared 
to advocate a change of the existing system in California, I 
certainly am not prepared to advocate a change of the an- 
cient custom in Maryland. I concur, however, in these 
passages from the report of my colleagues : — 

" Under the existing law all grounds appurtenant to houses 
of worship, which are not yielding a revenue, are treated by 
the assessors as exempted. Therefore, a large lot of ground 
can be purchased in Baltimore city, a church or chapel built 
upon one comer of it, and the whole lot held free of taxes, 
and therefore free of expense until the surrounding property 
has been improved, and the value of the church's vacant lot 
greatly enhanced. Church members, who entertain the 
proper and laudable desire to gratify their taste, or minister 
to their comfort by means of handsome or costly church 
property, should do so at their oa\ti expense ; and it cannot 
be claimed that rehgious bodies have any right to enhance 
their wealth by participating in the increased value of land, 
which results from the improvement of the neighborhood,^ 
without paying the state and county the same taxes paid by 

1 As to the church, this would be called an unearned increment. 



TAXATION OF INSTITUTIONS. 345 

Others for the benefits of government, which render them 
secure in the possession of their land. . . . We have be- 
Ueved it judicious to go so far as to recommend the taxation 
of parsonages and all other church property except the house 
of worship itself, and the ground necessary for the uses 
thereof, which we have thought it best, in view of the above- 
mentioned construction now placed by the assessors upon 
the law, and similar possible abuses, to limit to ten feet on 
either side of the building." 

EDUCATIONAL AND BENEVOLENT INSTITUTIONS. 

I am obliged to withhold my assent from the recommen- 
dation of my colleagues in the tax commission, looking to 
the taxation of the property of incorporated schools, colleges, 
and universities. Nothing yields so large a return to the 
tax-payer as this exemption. If the state of Maryland herself 
had provided her youth with a complete system of schools 
like Michigan, beginning with the common schools, and by 
suitable gradation extending up to the magnificent Univer- 
sity of Michigan, it might, perhaps, be proper, like California, 
to tax private institutions, but such a system would cost 
Maryland at least ^500,000 per annum, and this sum is now 
saved to the people of the state. Until the state of Maryland 
resolves to provide her own youth with complete instruction 
in public institutions, it is poor policy to tax those who 
attempt to supply this deficiency, and thereby confer an 
inestimable benefit upon the commonwealth. 

Washington and Jefferson both emphasized repeatedly, in 
their various public and private writings, the importance of 
educational institutions of the highest character, as essential 
to the welfare of the people and the maintenance of free and 
enhghtened institutions. Washington never ceased to urge 
upon his countrymen the advantages of a great national uni- 



346 TAXATION AS IT SHOULD BE. 

versity, and for the establishment of one he made a donation 
of his shares in the Potomac Company. In a letter dated 
March i6, 1795, he uses these words in speaking of his pro- 
posed national university : " The time is therefore come 
when a plan of universal education ought to be adopted in 
the United States. Not only do the exigencies of public and 
private life demand it, but, if it should ever be apprehended 
that prejudice would be entertained in one part of the 
Union against another, an efficacious remedy will be to 
assemble the youth of every part under such circumstances 
as will, by the freedom of intercourse and collision of sen- 
timent, give to their minds the direction of truth, philan- 
thropy, and mutual conciliation." Washington's Farewell 
Address contains these wise words, which the people of 
Maryland cannot make a mistake in laying to heart : " Pro- 
mote, then, as an object of primary importance, institutions 
for the general diffusion of knowledge. In proportion as 
the structure of a government gives force to public opinion, 
it is essential that pubhc opinion should be enlightened." 

Jefferson advocated in Virginia the establishment of a 
complete system of instruction, from common school to 
university, holding rightly — for all experience teaches it — 
that common schools must be but poor and indifferent, 
unless stimulated and elevated by the presence and assistance 
of superior institutions. Like Washington he exerted him- 
self more actively in favor of the university than for any 
other part of his educational system. In a report to the 
General Assembly of Virginia, on the subject of Education, 
signed by others, but which derived its inspiration from 
Jefferson — if indeed he did not actually write it — these 
words are found : " In free states, where the government is 
founded upon, and is the organ of the pubhc will, it is indis- 
pensably necessary that that will should be enlightened." 



TAXATION OF INSTITUTIONS. 347 

With regard to the contemplated University of Virginia, it is 
further remarked : "The advantages that will result from the 
establishment of such an institution are incalculable. At 
present a great proportion of our youth are sent out of the 
state, and sometimes out of the United States, for the acqui- 
sition of science in general, or with a view to a proficiency 
in some of the learned professions. Large sums of money 
are thus annually sent away, . . . The young men of our 
country thus, by leaving their own state before their judg- 
ments are formed, will frequently acquire elsewhere habits 
and opinions uncongenial with those of their fellow-citizens. 
Estranged by absence from the customs and principles of 
their parents and of their ancestors, they return to some 
degree aliens to their native land. Every enlightened states- 
man must consider the education of the youth of a country 
as intimately and inseparably connected with its high pros- 
perity. It is a high and solemn duty, which the government 
is bound by every consideration of patriotism and interest 
to discharge." Thus was the University of Virginia estab- 
lished, and to-day the state pays ^40,000 a year in taxes 
for its maintenance. 

The university which by the munificence of Johns Hop- 
kins was established in Baltimore more nearly corresponds 
to the ideas of Washington and Jefferson than any other in 
the United States. It brings together American youth from 
every section, and unites them in feelings of a common 
patriotism. No other institution has done so much to keep 
our youth in their own country for the highest education, 
and to prevent that estrangement from their native land, so 
lamented by Jefferson in his day. The highest instruction 
is never remunerative in the narrow sense of that word, 
though it in the end pays as nothing else does. The fees 
from the students of the Johns Hopkins University have not 



348 TAXATION AS IT SHOUID BE. 

covered in the past one-tenth of its expenses. To tax this 
institution would cripple its usefulness, for it lends a hand 
to gifted but poor young men, destined on account of this 
timely aid to attain greatness and become benefactors of 
their kind. Is it indeed desired by the legislature that our 
highest institutions of learning should be rendered so expen- 
sive as to exclude all but the wealthy? Is this worthy of 
Mar}dand? Is this the spirit of democracy which is our 
boast? Some snobs would be glad to see all favors to poor 
students abolished, and the tuition fees trebled, but do 
the hard-working people of Maryland desire this? Does 
Maryland desire the unenviable notoriety of being the only 
state in the Union, neither to provide a university for its 
youth nor to allow others to do so without being subject to 
taxation ? 

A hospital might also be managed as a money-making 
institution, but that was never the intention of the trustees 
of the Hopkins Hospital so soon to be opened. Shall the 
benefits of that institution also be restricted to those who 
count their money by the hundred thousand ? This would 
be conduct worthy of those who regard our public school 
system as ranking with " free soup houses." 

These two institutions are mentioned first, because I am 
most familiar with these ; but the other philanthropic insti- 
tutions for which Maryland is famed would likewise be 
crushed by taxation, for they were never designed to make 
money. The Pratt Library,^ the Peabody Institute, and the 
new College for Girls, which our Methodist fellow-citizens 
are establishing, occur at once to the mind. All these insti- 

1 This could hardly be taxed, for it is legally regarded as a public 
institution, being supported by annual appropriations which the city 
was induced to make by Mr. Pratt's donation of over ^800,000 to the 
city, in addition to over $200,000 spent in buildings. 



TAXATION OF IXSTITUTIONS. 349 

tutions bring youth to Maryland, and their famihes often 
come with them. Our advantages make our state a favorite 
place of residence for people of North and South, and to 
tax those institutions which are our pride and our glory 
would not only be a humiliating spectacle ; it would drive 
from us many milhons of dollars annually, and would in- 
crease the burden of taxation by lessening the taxable basis. 
No part of the community would escape the loss, and many 
who minister to the wants of those attracted to Maryland 
by our advantages would be completely ruined. 



CHAPTER XIII. 

TECHNICAL DETAILS AND ADMINISTRATIVE 
MACHINERY. 

THE administrative machinery connected with the rev- 
enues of states and cities is an essential part of the 
general administration of the country, and the reader might 
with propriety be referred to works on administration for a 
treatment of this subject. It is, indeed, impossible to deal 
with the topic placed at the head of this chapter adequately 
in this place. A few general principles A\dll be called to the 
reader's attention, and a scheme for the assessment of taxes 
in cities and counties will be elaborated. 

It is manifest from what precedes that we must make a 
sharp distinction between the tax officials concerned v/ith 
local taxation and those concerned with state taxation. 
Real estate should be left entirely to the former, and be 
assessed under the supervision of a single county authority, 
like the county auditor of Ohio. Where cities like Bal- 
timore are in no county, municipal authorities should' 
alone be intrusted with assessment and collection of taxes 
on real estate. It is desirable in the case of large cities 
like New York and Philadelphia to indentify completely 
city and county. It is indeed difficult to tell what such cities 
gain by the existence of any county government. Its 
absence has been, I venture to say, an unmixed blessing to 
Baltimore. State and county administration should each be 
under one single responsible head. The absence of such a 



TECHNICAL DETAILS. 351 

head is a general complaint among states which do not have 
one. An officer like the state auditor of Ohio or comptroller- 
general of Georgia, with large powers, is a necessary feature 
of good administrative machinery. When such machinery 
is provided in a county, the fair assessment of real estate 
throughout the county need never occasion difficulty. 
'^ Property ought always to be assessed at its true selling 
value at voluntary sale, not at forced or auction sale. Any 
other rule opens the way for an abuse of power, and is cer- 
tain to lead to injustice. The reasons for such assessment 
are well stated in these words by the Illinois Revenue Com- 
mission of 1886 : — . 

"The law requires that all property shall be assessed at its^ 
fair cash value. Assessors are sworn so to value it ; but 
they are far from doing it. Real estate is generally put down 
at one-third of its value, frequently much less ; and personal 
property at a yet smaller fraction. If there were uniformity 
in the reduction, perhaps but little harm would be done, but 
there is not. The assessor, having forsaken the standard of 
the law, is without guide or restraint, except his own varying 
judgment, and subject to pressure of importunate tax-payers, 
who pull steadily downward. The desire of each locality to 
avoid the payment of an undue proportion of the state tax 
would, of itself, be sufficient to explain this tendency to low 
assessments, and the tendency is intensified by the impres- 
sion, everywhere prevalent, that low assessments stand for a 
low rate of taxation ; and, vice versa, that full assessments 
will increase the amount of taxes to be paid. 

" The study of the problem convinced the commission 
that the liability to inequitable assessments is greatly in- 
creased by this system of undervaluation. 

" Inequalities that would be so suggestive as to be almost 
\ self-corrective as between full values, escape notice when a 



352 TAXATION AS IT SHOUID BE. 

fractional value obtains, and the low price at which property 
is rated virtually acts as an estoppel of complaint on the part 
of the property-owner, even though his property is rated 
higher than that of his neighbor. He cannot complain that 
his property is rated too high per se, and it seems ungener- 
ous and unneighborly to complain that, in proportion, his 
friends and neighbors are rated too low." 

OATHS. 

The subject of oaths has already been touched upon. 
Prussia does not permit them in matters of taxation, and 
England requires them only in exceptional cases. The Eng- 
lish income tax returns are signed by the tax-payers, who 
"declare" — the formula reading"! declare." Tlie pen- 
alty for false declaration is a substantial one, namely, ;!^20 
and a trebling of the tax. The Illinois Revenue Commission 
in the report just referred to use these words respecting 
oaths : — 

" In regard to the assessment of personal property by indi- 
viduals, believing the requirement of an oath to a schedule 
as generally ineffectual in obtaining a disclosure of property, 
we have omitted such requirement. We believe such re- 
quirement to be debauching to the conscience, and subver- 
sive of public morals — a school for perjury, promoted by 
law. With the unscrupulous it imparts no additional verity 
whatever to the schedule, and it is wrong and oppressive to 
the honest tax-payer that he should be compelled to take 
upon liis conscience an obligation which he well understands 
is disregarded as a rule by others. Such requirement has no- 
where been found effective in the disclosure of property that 
the assessor could not have otherwise discovered. We have 
therefore proposed that the requirement of the oath be done 



TECHNICAL DETAILS. 353 

away with, and that there be substituted a substantial penalty 
for a false schedule." 

It would seem to be wise to abandon oaths for returns, 
allowing, however, the tax officials to require an oath or 
affirmation at their discretion. 

It goes without saying that more care should be taken in 
the selection of assessors and collectors, who ought to be 
elected for longer periods than one year. Appointment 
under good civil service rules would be still better for all, 
save the heads of the county and the state tax departments, 
who might be elected. Even these heads would better be 
appointed by suitable authority and retained during good 
behavior. Efficiency, stabihty, and independence of officials 
are the essential conditions of good financial administration. 
It is desirable to give a large number of citizens a partici- 
pation in government through the medium cf unpaid hon- 
orary commissions, appointed to co-operate with regular paid 
officials. The Baltimore custom of requiring proposed ex- 
penditures of large sums of money to be raised by loans, to 
be submitted to the people for ratification, is to be com- 
mended. It is an excellent old democratic custom. This 
referring back of questions to the people, called the refei'- 
endum, has been used with excellent effect in Switzerland, 
and its use ought to be extended in our states, cities, and 
other local political units. The disposal of any great piece 
of public property, like the Philadelphia gas-works, ought 
never to be possible unless authorized by popular vote. 
Such a provision would at once put a quietus on many 
schemes for plundering the public. 

MONEY TO BE RAISED FOR THE COMING YEAR. 

The slipshod way many Maryland counties have of spend- 
ing the money and levying taxes for past expenditures only 



354 TAXATION AS IT SHOULD BE. 

keeps them always in arrears, and is condemned by every 
intelligent official of practical experience. Taxes should be 
levied for the estimated expenditures of the coming year. 

DISCOUNTS FOR THE PROMPT PAYMENT OF TAXES. 

On this subject I quote from the "Report of the Baltimore 
City Tax Commission " ; and as the quotation embodies my 
own views it is unnecessary to make any additions.^ 

" But sections thirty-five and thirty-six contain provisions 
making material changes. For years past taxes have not 
been due and payable until the first of January of the year 
following that for which they were levied. No penalty 
attached, nor could payment be enforced before that time. 
Many years ago this was felt to be a serious inconvenience, 
for no one paid taxes until the end of the year, and the city 
was often without money, and compelled to obtain tempo- 
rary loans to meet current expenses. 

"In 1835 Mr. F. J. Dallam, then city collector, suggested 
in his annual report that ' inducements be held out for the 
prompt and punctual discharge of the public dues, by allow- 
ing to those who pay for certain periods a discount,' etc., as 
was done in other cities, and ' charging interest on all sums 
remaining unpaid by a specified day.' This recommenda- 
tion was followed by Resolution No. 62, of 1836, which for 
the first time established the system of discounts in Balti- 
more, and required that interest at the rate of six per cent. 
per annum be charged on all bills unpaid after January i . 
The system has remained in force, unbroken, until the 
present day. It has been discussed and criticised, favored 

1 It will be understood that all of the members of the commission, 
myself included, worked on this proposal as well as on the other sug- 
gestions from the state and city tax commission reports, which I quote. 



TECHNICAL DETAILS. 355 

and opposed, in official reports and elsewhere, but not 
abolished. 

" We deem the system of discounts unjust and impolitic. 
In the words of Mr. Jno. B. Seidenstricker, city collector in 
1 844, it ' may be considered a bonus to tax-payers for the 
performance of a duty.' Many of the best administered 
cities in this country have abolished them, and in one or 
two other instances they have been reduced to trifling sums. 
Mr. Thomas Hills, chairman of the assessors of Boston, says : 
'Boston does not have, and has not had for more than 
twenty-five years, to my knowledge, the system of discounts. 
It is a matter of local option. . . . Those towns which 
allow them are often agitated on the question of their dis- 
continuance — mainly on the ground (which I think is well 
taken) that the city or town taxes all, alike the rich and the 
poor, to raise a fund to be distributed to the rich alone, as 
that class only are in a position to profit by the exemption 
of assessment, which is nominally open to all.' ^ 

1 " In discussing the question of discounts the Massachusetts Tax 
Commissioners say : ' In our opinion the system is open to grave 
abuse, is wholly unnecessary — not only works an inequality, but an 
inequality which favors those who have money in hand at the expense 
of those who have not, and puts an increased tax directly upon the 
polls and estates of the poor and embarrassed, while to the same degree 
it relieves the forehanded and the rich. 

' First. The practice is wholly unnecessary. The whole power of 
the state is behind the tax-gatherer. He can compel payment by arrest, 
distress, sale, or suit. His demand is just, for a sum certain, and of 
which the tax-payer has sufficient notice to enable him to be ready 
with the means of payment. 

' Second. The allowance of the discount works inequality between 
the tax-payers who can avail themselves of its provisions and those who 
cannot. 

* We will suppose the valuation of a town to be $100,000, and the 
amount of money needed for the year $2000. If no discount is allowed, 



356 TAXATION AS IT SHOULD BE. 

"In 1884 the amount of taxes remitted in discounts was 
$90,967.19. The largest sum to which discounts ever 
amounted in this city, in a single year, was $192,844.08, 
in 1877. In no year, for fifteen years past, has the amount 
of discounts been as low as $75,000 dollars. Of course, 
this loss out of the levy must be made up, or there will be 
a deficiency in the city treasury. So every year, in estimat- 
ing what rate of tax it will be neccessary to levy, the sum to 
which it is anticipated the discounts will amount during the 
year is reckoned, and the tax rate increased by enough to 
produce it. 

" We therefore recommend that the practice of allowing 

the tax voted and laid will be ^2000, and the rate $20 per thousand. 
But suppose the town has been in the habit of voting a discount of ten 
per cent, for the prompt payment, and that it is well understood that 
eighty per cent, of the tax will be paid in season to receive the abatement. 
The town must vote to raise at least $160 more than the sum needed, 
and, as in theory, every one may avail himself of the discount, it can- 
not safely direct its assessors to levy less than $2200, — or rather, as the 
discount is from the gross sum, $2222.22. 

'The account of the tax-payer, whose estate is included in the valua- 
tion at $10,000, and who is able to avail himself of the discount, stands 
thus : — 

Valuation. Assessed Tax. Discount. Actual Tax. Actual Rate. 
$10,000 $222.22 $22.22 $200.00 $20.00 

'While the poorer citizens, whose aggregate valuations are of the 
same amount, but who find themselves unable to pay in season to obtain 
the deduclion, stand thus : — 

Aggregate Valuation. Assessed Tax. Discount. Actual Tax. Actual Rate. 
$10,000 $222.22 $222.22 $22.22 

* But if no discount had been allowed, the case would have stood as 
follows : — 

Valuation. Rate. Tax. 

The rich man . . . $10,000 $20.00 $200.00 ) ^^ equality 
The poor man . . . 10,000 20.00 200.00 / 



TECHNICAL DETAILS. 357 

discounts be discontinued. Recognizing the fact that some 
mode must be adopted to prevent the city treasury from 
being left empty for a large portion of the year, we have 
framed sections thirty-five and thirty-six of ' Ordinance No. 
I ' to meet this want, and also for the purpose of mak- 
ing the burden of taxation less onerous to persons of limited 
means, by dividing the year's taxes into four equal parts, 
and providing that one shall become due in each of the four 
quarters ending April 15, July 15, October 15, and January 
I. This mode of payment will keep the city supplied with 

' If no allowance is made when the tax is voted for the amount to be 
lost in discount, the result must be the same. A greater tax must be 
assessed the succeeding or some future year to make up the deficiency 
caused by the discount, and of this tax the person unable to pay in 
season to receive the abatement must pay more than his share. 

* It is the essence of such a discount that it can be availed of by the 
rich, and cannot by the poor. Whatever its amount, — one per cent. 
or ten, — and there is no restriction in the law, it must practically work 
an equality at the expense of those who have least. 

' Third. As a means of relieving the towns fur the payment of inter- 
est for money borrowed, the plan is most absurd. In one city the tax 
bills are required to be in the hands of the collector on the first of Sep- 
tember, and the discount allowed for payment before the 1 6th of Sep- 
tember is such that the rate of interest paid by the city is equivalent to 
120 per cent, per annum, while in many towns, the discount calculated 
in the same way is equivalent to the payment of interest at 40 per 
cent, per annum. The bare statement of the fact shows that the prac- 
tice cannot be defended on the ground of economy in the saving of 
interest to municipalities. 

* Fifth. This practice is inconsistent with the attitude which a state 
ought to maintain toward its subjects. The command, with penalty 
for disobedience, rather than reward for that compliance, which gov- 
ernment, as of course, has the right to expect, is the true policy for 
a state.' " — Reports of the Commissioners relating to Taxation, 1875. 
Page 75. 



358 TAXATION AS IT SHOUID BE. 

money at all periods of the year without paying a discount 
for it, and will facilitate the payment of taxes by persons 
who cannot, at one time, readily command the amount of 
money required to meet their taxes, as now demanded. 

" Section thirty-six proposes to secure the prompt payment 
of taxes by imposing a penalty at the rate of one per cent, 
per month for failure to pay, instead of offering a reward in 
the shape of discounts for payments. In other particulars, 
the provisions of existing laws and ordinances for the enforce- 
ment of payment of taxes in arrears, are left undisturbed, 
except that the collector is prohibited, under pain of re- 
moval from office, from indulging delinquent tax-payers 
beyond the period fixed in the proposed ordinance." 

It is urged that people living outside of cities receive 
the bulk of their income once a year on the sale of farm 
produce, and that it is really more convenient for all con- 
cerned that they should pay all their taxes at one time. If 
there is nothing to be accomplished by allowing them to pay 
in instalments, it is best not to change the law in that respect. 
I would prefer, however, quarterly payments of taxes in 
municipalities, to assimilate direct to indirect taxation as 
nearly as possible in point of convenience. Quarterly pay- 
ments are allowed in Savannah, and the superintendent of 
police, General Anderson, told me that the people found 
them a great convenience. Probably no man ought to be in 
a better position to pass an opinion on the workings of a law 
like this in its effects on the people of moderate or slender 
means, than a superintendent of police. At the same time 
Major Hardee, the head of the tax department, told me that 
it occasioned him no inconvenience and required no extra 
clerk hire, as the labor was simply distributed more evenly 
throughout the year. He said, indeed, that there was a 



TECHNICAL DETAILS. 359 

positive advantage in the system, as, on account of the 
instahnent plan there was less difficulty in collection. 

In Quebec, Canada, people are allowed to pay part of 
their taxes at one time, and similar testimony was offered 
regarding the great convenience this method offered to the 
masses. I was indeed told that the poorer people in 
Quebec gave the tax officials less trouble and were less in 
arrears than their wealthier fellow-citizens. The system of 
quarterly payment is general in German cities, and appears 
to be very advantageous, and I am sure that republican 
America ought not to be less considerate in her dealings 
with the people than imperial Germany. People of slender 
means in Baltimore regard it as a hardship that they are 
forced to pay all their taxes at one time, and pitiful cases 
are related of the effect of this plan. 

Rumors reach me of strong opposition to this change at 
the City Hall, on the part of clerks in the tax departments. 
Now while no one is more appreciative of the dihgence and 
integrity of many of the public servants of the people of 
Baltimore, I cannot close my eyes to the inevitable opposi- 
tion on the part of a large portion of the office-holding class 
to whatever disturbs the routine of their work, nor can I 
persuade myself that the wishes of the tax department 
should take precedence of the wishes of the tax-payers. If 
the number of employes is insufficient, then a larger force 
should be engaged, and a very few extra clerks would be 
sufficient. I must then adhere to the recommendation of 
the Baltimore Commission's report of 1886, that payment 
of taxes in quarterly instalments be allowed in Baltimore, 
and this plan I would recommend for other cities, while I 
would allow counties to decide for themselves in regard to 
the time of paying, provided of course that the taxes should 



360 TAXATION AS IT SHOULD BE. 

be levied and collected promptly as often as once a year at 
least. 

The following quotations from the " Report of the Mary- 
land Tax Commission " give some of the main features of a 
system of municipal and county administrative machinery 
for the assessment of taxes. The various members of the 
commission gave considerable thought to this topic, and it 
is believed their schemes will be found suggestive, although 
it might be desirable to modify it to a greater or less extent 
to meet the needs of each particular state and city. The 
quotations are slightly altered.^ 

COUNTIES. 

The county treasurer of each county in this state shall be 
chairman of the board of assessors of his county. He shall, 
before the first day of December in each and every year, 
appoint two assessors for each three collection districts in 
his county, and if the number of collection districts is not 
divisible by three, he shall appoint an additional assessor if 
there are two collection districts left after making the divis- 
ion ; otherwise he shall appoint no additional assessor. But 
if the county be not divided into election districts, then the 
county commissioners shall divide it into as many assess- 
ment districts as they may deem necessar}^, but an assess- 
ment district shall never be conterminous with an election 
district ; and the county treasurer shall, before the first day 
in December in each year, appoint two assessors for each 
three such districts. The county treasurer shall have full 
authority to remove, for cause shown and recorded, any 
assessor appointed by him. Said assessors shall be ap- 

1 So many alterations are made that it would be unjust to my col- 
leagues in the tax commission to use quotation marks. There is less 
necessity for this because I took part in framing the bills. 



TECHNICAL DETAILS. 361 

pointed without regard to politics. During the year 1888 
one-third of the assessors shall be appointed for one year, 
one-third for two years, and one-third for three years, and 
thereafter every assessor appointed by the county treasurer 
shall hold office for three years from the date of his appoint- 
ment, unless sooner removed by the treasurer ; but in case 
of any vacancy occurring by death, resignation, removal 
or other cause, the treasurer shall fill such vacancy by 
appointment for the unexpired term. 

The assessors for the several districts of each county, 
together with the county treasurer, shall constitute the board 
of assessors for the county. The county treasurer shall call 
said board together, in the month of December in each 
year, upon such day as he shall select, when he shall read to 
them such laws or parts of laws as may relate to the duties 
of their office, and shall instruct them concerning their 
duties, and shall especially caution them that they must 
value property at its full cash value, without looking to a 
forced sale ; and they shall consult together concerning 
their said duties. 

The county treasurer shall cause to be published, once a 
week, for three weeks, during the month of January in each 
year, in some newspaper or newspapers, not more than two, 
published in the county, or if there be no newspaper pub- 
lished in the county, then in some newspaper or newspapers, 
not exceeding two, circulating in the county, a notice to 
every person of and over the age of twenty-one years, to 
return all schedules herein provided, duly filled and signed, 
to the assessor of his district, on or before the first day of 
February next ensuing ; and every such notice shall set forth 
the post-office address of the assessors of the several districts 
in the county ; and the county treasurer shall cause to be 
printed and delivered to his assessors by the first day of 



362 TAXATION AS IT SHOULD BE. 

January in every year, as many copies as may be requisite 
of the blank form of schedules set forth in this law. 

It shall be the duty of every such assessor to send by 
mail, before the tenth day of January in each year, to every 
person whose name appears on the tax books of his district, 
and to every person in his district, so far as he may know 
or ascertain them, copies of the form of schedules provided 
in this article ; and every form shall have distinctly written 
or printed upon it the name and post-office address of the 
assessor to whom it is to be returned. 

It shall be the duty of every person, of or over the age of 
twenty-one years, residing in any county of this state, and of 
every person of or over said age who owns any taxable per- 
sonal property permanently located in any county of this 
state, though he does not reside therein, or is in receipt of 
an income exceeding $600, to return to the assessor of his 
district, copies of the schedules hereinafter provided, duly 
filled and signed, on or before the first day of February in 
each and every year. 

Every person knowingly signing any schedule containing 
any wilfully false statement shall be deemed guilty of a mis- 
demeanor, and upon conviction thereof, shall be sentenced 
to undergo confinement in the penitentiary for not less than 
one year nor more than ten years. 

After valuing the property and income of such persons as 
have not returned schedules as required by this article, the 
said assessor shall add ten per cent, to the total value of such 
of said property and income as is taxable, of which said 
addition it shall be the duty of the assessor imposing such 
per centum to give notice to the person so failing to make 
the return ; provided, that the county treasurer shall have 
power, for good cause shown, to remit such penalty at any 
time before the fifteenth day of May next following, to any 



TECHNICAL DETAILS, 363 

person applying for such remission, who shall at the same 
time make a full return. 

While engaged in making valuations the said assessors in 
each county shall meet as a board of assessors at the office 
of the county treasurer one day in every two weeks, when 
each assessor shall return all valuations completed by him 
since the last previous meeting of the board ; and all such 
valuations shall be passed upon by said board, which shall 
have full power to review, alter, and equalize all valuations ; 
and the valuations of the assessors shall be finally made by 
a majority of said board, in its sessions ; provided, that if 
said board cannot complete its work in its said bi-weekly 
sessions, it may be called together by the county treasurer 
and sit for that purpose between the first and tenth days of 
May. 

Before the valuations of the board of assessors shall have 
been returned to the county commissioners, as hereinafter 
provided, all final valuations made by said board shall be 
examined by the county treasurer, who shall deduct from 
the total valuation of the property of each person whose 
property has been valued, the said board's valuation of any 
exempted property which may have been included in said 
total valuation of such person's property, and shall indorse 
upon the account of each person's property the items so 
deducted from his account, and the said board's valuation 
of such items ; and he shall note thereon the total valuation 
of the taxable property of such person. 

The county treasurer of each county shall, not later than 
the fifteenth day of May, in each year, return the valuations 
of the board of assessors to the county commissioners, 
noting at the same time those who have failed to return 
schedules as required, and the fact that the sum of ten per 
centum has been added to the value of the taxable property 



364 TAXATION AS IT SHOUID BE. 

of every such person, as fixed by the said board, except 
where such penalty has been remitted by the said treasurer ; 
and such valuations shall remain in the office of the county 
commissioners for t^venty days, open to the inspection of 
persons interested in them, but only real estate valuations 
shah be open to public inspection/ 

Bet^veen the fifteenth day of May and the fifth day of 
June, in each year, any person interested in any property 
returned for taxation by the county commissioners, may 
appeal from the valuation of the board of assessors to the 
county commissioners, who shall hear and decide all such 
appeals, and may afiirm or alter the valuations appealed 
from, as they shall judge fair, just, and according to law. All 
appeals shall be heard and disposed of before the tenth day 
of June in the same year. 

The county commissioners may not remit the ten per 
cent, required by this act to be added where any person 
fails to return a schedule, except as to any such part as 
they may abate of the valuation upon which it is imposed ; 
but if, upon investigation, and after giving opportunity for 
hearing to any one who has failed to make a return, and the 
ten per centum penalty for which failure has not been 
remitted by the county treasurer, the said commissioners 
believe that such omission was wilful and intentional, and 
with the intent to evade the payment of taxes, they shall 
add, in their discretion, not more than fifty per centum nor 
less than tvvent}--five per centum to the valuation of the tax- 
able property which he should have returned.- 

1 It must be remembered that the inspection of grand juries or some 
similar body whose proceedings are secret, is an essential part of this 
scheme of taxation. 

2 In the Middle and Western states, county boards of supervisors 
correspond in some respects to the county commissioners of Southern 
states. 



TECHNICAL DETAILS. 365 



CITY ASSESSORS. 



There shall be appointed in the city of Baltimore, in the 
same manner as other city officers are appointed, sixteen 
discreet and competent persons, to be called city assessors, 
whose duty it shall be to value all taxable property and in- 
comes in the city, or belonging to residents thereof, except 
such property as is excepted from valuation by them and all 
real estate whether taxable or not. The said assessors shall be 
appointed without regp.rd to politics, and shall each receive 
a salary of fifteen hundred dollars per annum. They shall 
take the oath provided by ordinance, and give bond for the 
faithful discharge of their duties, as other city officers. 
Immediately after the appointment of said assessors the 
mayor shall designate one of them to be chairman of the 
board of assessors, and the person so appointed chairman 
shall continue to act in said capacity until the expiration of 
his term of office as assessor, unless sooner removed from 
the chairmanship by the mayor. Whenever there is a 
vacancy in the chairmanship of the board of assessors, the 
mayor shall appoint one of the assessors to be chairman of 
the board. 

In the year eighteen hundred and eighty-eight, sixteen 
city assessors shall be appointed, four of whom shall remain 
in office and serve for one year, four for two years, four for 
three years, and four for four years, accounting, as to all of 
them, from the first day of March, 1888 ; which several 
terms of service shall be determined by lot at their first 
meeting. 

In the month of February, in each succeeding year, there 
shall be appointed four city assessors, in the place of those 
whose term of office shall expire upon the first day of March 



366 TAXATION AS IT SHOULD BE. 

in such year ; and the said assessors appointed as prescribed 
by this section, shall continue in office for four years. 

Whenever any vacancy shall occur in the office of city 
assessor by death, disqualification, resignation, removal, or 
otherwise, such vacancy shall be filled by appointment for 
the unexpired term which shall have become vacant. 

As soon as may be in the year eighteen hundred and 
eighty-eight, and thereafter annually in the month of Febru- 
ary, there shall be appointed, in the same manner as other 
city officers are appointed, a clerk to the city assessors, who 
shall receive a salary of fifteen hundred dollars per annum. 
Said clerk shall attend daily at the office of said assessors, 
and he shall keep the minutes of their meetings ; he shall 
also carefully preserve the records of the said office ; receive 
all papers required to be delivered at or deposited in the 
same ; index and keep in proper order all papers and books 
required to be kept open to public inspection therein ; 
transmit to the clerk of the Appeal Tax Court a copy of all 
valuations made by the city assessors immediately upon the 
same becoming final ; and on or before the twenty-fifth day 
of February, in each and every year, he shall deliver to the 
clerk of the Appeal Tax Court copies of all valuations then 
remaining in the office of the city assessors, whether or not 
the same have become final ; and upon any appeal being 
taken from any valuation made by the city assessors to the 
Appeal Tax Court, he shall immediately deliver to the clerk 
of said court all schedules, valuations, and other papers 
which relate alone to the case in which such appeal is taken, 
and copies of such parts of all other papers as relate thereto, 
and he shall perform such other duties as properly pertain 
to his office. And if the mayor shall deem it necessary, 
then in the same manner, and at the same time with the 
appointment of said clerk to the city assessors, there shall 



TECHNICAL DETAILS. 367 

be appointed an assistant clerk to the city assessors, who 
shall receive a salary of twelve hundred dollars per annum, 
and whose duty it shall be to assist the said clerk to the 
city assessors in the discharge of the duties of his office by 
performing such part of the work thereof as the said city 
assessors may direct. 

The city assessors shall assemble in meeting at least once 
a week, for the transaction of general business, and espe- 
cially for the hearing of any appeals that may be brought 
before them by persons dissatisfied with valuations made by 
any of them, as hereinafter provided. 

The city assessors, in meeting assembled, shall have 
power to provide and establish rules and regulations for the 
conduct of such meetings, for the making of valuations by 
the respective assessors, and for the time, place, and manner 
of hearing appeals ; and to require the attendance of wit- 
nesses, and the production of books and papers. Any 
person who, after having been duly notified to appear as a 
witness, or produce any books or papers, before the said 
assessors, in meeting assembled, shall refuse or fail so to do, 
shall, unless excused by the city assessors, forfeit and pay a 
fine of not less than fifty nor more than one thousand dol- 
lars, which shall be collected as other fines and penal- 
ties are now or may hereafter be collected in the city of 
Baltimore. 

VALUATION OF REAL AND LEASEHOLD PROPERTY IN BALTIMORE 

CITY. 

Between the first day of April and the first day of 
September in the year eighteen hundred and eighty-nine, 
the city assessors shall value all real and leasehold prop- 
erty in the first, second, third, fourth, fifth, and sixth 
wards. Between the first day of April and the first day of 



368 TAXATION AS IT SHOULD BE. 

September, in the year following, the said assessors shall 
value all real and leasehold property in the seventh, eighth, 
ninth, tenth, eleventh, twelfth, and thirteenth wards. And 
betiveen the lirst day of April and the first day of Septem- 
ber, in the year thereafter, the said assessors shall value all 
real and leasehold property in the fourteenth, fifteenth, six- 
teenth, seventeeth, eighteenth, nineteenth, and twentieth 
wards. And between the said days in the fourth year from 
the year first above mentioned, the said assessors shall again 
value the property which they are hereinbefore required to 
value in said first mentioned year ; and so in the fifth and 
sixth years, they shall again value the said property valued 
in the second and third years respectively ; and so they shall 
continue in the same manner, each year revaluing the real 
and leasehold property valued the third previously. But 
whenever there may have been a considerable appreciation 
in the value of any real or leasehold property, the said 
assessors shall immediately value the same, and they shall 
forthwith give notice of such revaluation to the owner of 
such property ; and the o^^ner of any property so revalued 
because of appreciation in value, who may be dissatisfied 
wdth any such revaluation, may appeal therefrom to the 
Appeal Tax Court ; provided, such appeal be taken within 
twenty days from the time of revaluation ; and in case of 
any depreciation, by fire or other cause, the said assessors 
shall have power, upon the application of the owner, to make 
such abatement as they may deem just, and such o^iier 
shall have the right to appeal from the decision of said 
assessors upon such an application, to the Appeal Tax 
Court ; provided such appeal be taken within t^venty days 
from the date of such decision by the said assessors. 

In valuing real or leasehold property, the city assessors 
shall value each lot or parcel of ground separately ; and in 



TECHNICAL DETAILS. 369 

their return thereof they shall describe each lot by its loca- 
tion, naming the street or streets upon which it binds, or if 
it binds upon no street, but upon an alley or alleys, then 
such alley or alleys shall be named, also the number of front 
feet and depth of such lot ; and they shall value improve- 
ments separately from the ground upon which they stand, 
and in addition to the description of such ground, the street 
number of the improvement shall be given. 

APPEALS. 

The city assessors, in making valuations of property, 
whether real or personal, shall do so, ward by ward, in 
regular order, taking up each ward in order, according to its 
number, and completing as far as practicable, their work 
therein, before beginning to make valuations in another 
ward. Before the assessors begin their work in any ward, 
the chairman of the city assessors shall divide such w^ard 
into assessment districts, and shall assign the several as- 
sessors to the respective districts, as far as practicable, send- 
ing them two by two together; and he may at any time 
change said assessment districts ; and the said chairman 
shall have the general control and direction of the work of 
the assessors. Whenever the said assessors shall have com- 
pleted, as far as practicable, their valuations in any ward, such 
valuations shall remain in the office of said assessors, open 
to inspection by any person interested therein, and except 
as to real estate to no one else, for twenty days from the 
time of such completion ; and at the time of the said com- 
pletion of the valuations in any ward, the said assessors shall 
cause to be published, in not less than three daily newspapers 
published in this city, a notice that the valuations of prop- 
erty (specifying whether real and leasehold or personal) in 
such ward are open to such inspection in the office of the 



370 TAXATION AS IT SHOUID BE. 

city assessors, and setting forth the period within which 
appeals will be received. 

Any person interested in any property valued by any city 
assessor, shall have the right to appeal from such valuation 
to the city assessors in meeting assembled, at any time 
within the twenty days during which said valuation remains 
in the office of said assessor, as provided in the preceding 
section ; and any person dissatisfied with the decision of the 
said assessors in meeting assembled, upon his appeal to 
them, may appeal therefrom to the Appeal Tax Court at any 
time within ten days after such decision is made, and the 
decision of said court shall be final ; provided that in case 
any appeal, whether to the city assessors or Appeal Tax Court, 
shall not have been heard and decided before the taxes or 
any instalment of taxes assessed upon the valuation appealed 
from have become due, the pendency of such appeal shall 
not postpone the payment of such taxes, but they shall be 
paid ; provided, that such payment shall not prejudice the 
right of the person appealing to further prosecute his appeal ; 
and in case he should thereafter be allowed a deduction 
upon the said valuation, the excess of taxes theretofore paid 
thereon shall be credited to him on account of any taxes 
he may then owe, or the first which may thereafter become 
due. 

The mayor and city council of Baltimore, shall in 1888, 
appoint a board to consist of at least three persons, one to 
be appointed for two years, one for four years, and one for 
six years, and thereafter each person to be appointed for six 
years, to be styled the Appeal Tax Court, who shall meet from 
time to time for the purpose of hearing appeals and making 
transfers and correcting the accounts of assessable property 
charged to tax-payers, and the assessment thereof; the said 
mayor and city council may also appoint such number of 



TECHNICAL DETAILS. 371 

assessors as they may deem necessary in investigating and 
ascertaining all omitted property, and assessing and return- 
ing the same to the Appeal Tax Court. 

The mayor and city council shall fill all vacancies in said 
Appeal Tax Court, as soon as practicable after any may happen 
therein, in the manner provided for in such cases of vacan- 
cies of other city officers ; and the members of said board 
shall receive such compensation as the mayor and city coun- 
cil shall provide to be paid by the city. 

It is impossible to present a bill for the collection of taxes, 
and for other features of state and local taxation, without 
extending unduly the limits of the present work. The 
changes which in each locality will be required, in the above 
draft of a bill, will not be difficult to make. Fifteen hundred 
dollars, for example, will secure the services of fairly good 
men as assessors in Baltimore, More would be required in 
New York City, where it costs twice as much to live in any 
comfort. Beggarly salaries are economy of the penny wise 
pound foolish order. 

CONCLUSION. 

What has been submitted in this work is nothing merely 
theoretical, but an improved system of taxation, every part 
of which has been tested by experience, every part of which 
is in harmony with the principles of true democracy. It is 
simple and easily enforced, and if to any it appears com- 
plex, it is only by reason of novelty. The more carefully it 
is examined, the more thoroughly, I am convinced, will it 
meet with approval. It aims to distribute the burdens of 
government according to abihty to bear them, to simplify 
administration, and to encourage business by removing those 
taxes and forms of taxation which fetter it, and giving it so 



372 TAXATION AS IT SHOULD BE. 

far as taxation is concerned as good opportunities in one 
place as in another. 

We have in our American commonwealths far better 
opportunity to estabhsh a satisfactory system of taxation 
than exists in any European state, where tradition, special 
privileges, and old customs impose fetters on the freedom of 
movement, and there is no reason why Maryland, where the 
need of financial reform is generally and keenly felt, should 
not strike out boldly and be the state to lead all others in 
the establishment of a sound system of taxation. 



PART IV. 

CONSTITUTIONAL PROVISIONS, STATIS- 
TICAL INFORMATION, AND MIS- 
CELLANEOUS MATTER. 



I. 

CONSTITUTIONAL PROVISIONS. 

I. — GENERAL REIMARKS. 

THE tables appended will enable the reader to survey 
the vast number of constitutional restrictions^ upon 
the freedom of states and cities in financial matters. It 
must be remembered that these tables exhibit only those 
restrictions which spring from the state, whereas the inter- 
ference on account of the judicial interpretations of the 
federal constitution, to which allusion has already been 
made, are very numerous. 

What shall be said of all these restrictions upon the liberty 
of movement? It is impossible to enter into any lengthy 
disquisition on constitutional law in this place, but attention 
must be called to a few main facts. 

Matter is placed in constitutions which properly belongs 
in statutes, for the purpose of constitutions is to lay down 
the main lines of legislative action, and not to dispense with 
legislation. The result is great uncertainty as to the validity 
of law and, in consequence, expensive litigation, which the 
public find irritating. It is calculated to undermine the 
foundations of good government, by destroying respect for 

1 These tables are based on that excellent work, Stimson's "American 
Statute Law," and on Poole's "Charters and Constitutions," published 
by the federal government in 1878. 



376 CONSTITUTIONAL PROVISIONS. 

law.^ Constitutions become so complicated that no one 
knows what they mean. The sovereign people set up a 
written instrument of which they do not comprehend the 
meaning, as supreme ruler over them. The effect is to 
place them at times in a condition worse than that of sub- 
jects of an absolute czar. The latter can be entreated to 
listen to reason ; the constitution must be obeyed, right or 
wrong, until it can be changed, and to effect a change is a 
long, tedious process, often indeed an impossibility, unless 
the majority in favor of the change is an overwhelmingly 
large one. Mr. Henry Hitchcock in his essay on " Ameri- 
can State Constitutions"^ calls attention to the fact that a 
temporary majority may impose their will for some time on 
the people of a state by securing the incorporation of their 
peculiar views in the state constitution. He does not, how- 
ever, it seems to me, appreciate the grave nature of the 
danger. Views change, and legislative requirements change ; 
but if constitutions enter into details, a vast majority of the 
people may on the one hand become the slaves of the dead, 
and on the other they may be ruled by a small but deter- 
mined minority which finds profit in governmental imperfec- 
tions. Mr. Hitchcock refers to the proposition of Sir Henry 
Maine, that when law becomes written and codified, its 
" spontaneous development ceases ; that the changes there- 
after effected in it are effected deliberately and from with- 
out ; and that from the moment when their laws are thus 
embodied in some permanent record the stationary condi- 

1 On the entire subject of state constitutions, the reader will do well 
to consult the excellent monograph of Dr. J. Franklin Jameson, en- 
titled "An Introduction to the Study of the Constitutional a .d Political 
History of the States," published in the Johns Hopkins University 
Studies in Historical and Political Science, Volume IV., No. V. 

2 New York, 1887. 



CONSTITUTIONAL PROVISIONS. 377 

tion of the human race is the rule, the progressive the 
exception." Mr. Hitchcock quotes these words from Sir 
Henry Maine : " With respect to them [progressive socie- 
ties] it may be laid down that social necessities and social 
opinion are always more or less in advance of law. We may 
come indefinitely near the closing of the gap between them, 
but it has a perpetual tendency to reopen. Law is stable ; 
the societies we are speaking of are progressive. The 
greater or less happiness of a people depends on the degree 
of promptitude with which the gulf is narrowed." Mr. 
Hitchcock, however, mentions the large number of new 
state constitutions and constitutional conventions, and seems 
inclined to agree with Mr. James Russell Lowell in the 
belief that our constitutions stand " not in the way of the 
people's will, but of their whim." The fact that most of 
the recent constitutional conventions were the outcome 
of a civil war seems to be overlooked, as does the fact 
that a growing and influential class, profiting by the ab- 
sence of power on the part of the representatives of the 
people, are determined that constitutional conventions shall 
not be held. When, according to the requirements of the 
constitution of New York, the people of the state two years 
ago were asked to signify their wishes with respect to a con- 
stitutional convention, a majority vote in its favor was given. 
Special interests, however, were opposed to the constitu- 
tional convention, and law and constitution have to this day 
been set at defiance. Moreover, as Professor Alexander 
Johnston has shown, it now seems probable that a federal 
constitutional convention is forever an impossibility. 

It is said that the people, the sovereigns, retain the pow- 
ers, not delegated. This is a superstition worthy to rank 
with the voodooism of the negroes of New Orleans. Power 
not delegated to the legislature cannot be exercised by the 



378 CONSTITUTIONAL PROVISIONS. 

people. Take the case of Maryland, interested in the 
Chesapeake and Ohio Canal. The constitution does not 
allow the legislature to use any money for the construction 
of internal improvements, or even for their maintenance. 
The state's investment in this enterprise, according to the 
last comptroller's report, amounts to ^25,574,713.55,^ yet 
not one cent can be spent to save this large property. The 
people have not retained the power to regulate their own 
affairs. They have virtually given the control of the canal 
to railroad corporations which can borrow money for their 
purposes. The power, which, according to popular illusion 
was retained, has been transferred to private corporations. 

This excess of constitutionaKsm seems to me dangerous 
because it tends to produce a fossihzation of laws and institu- 
tions. Conservatism is excellent, but it must be remembered 
that the only possible kind of conservatism is constructive 
conservatism. We have had one China in the world's his- 
tory, but another is impossible. Stationary conservatism, so 
called, is destructive and revolutionary. 

The application of what has been said to the matter of 
taxation is sufficiently obvious. A simplification of consti- 
tutional provisions is a necessary accompaniment of any 
sound reform of state and local taxation. While it is desira- 
ble that some general principles for the guidance of legisla- 
ture should be laid down, it is difficult to see how states like 
Massachusetts and New Hampshire, which have not been 
hampered by constitutional restrictions in regard to taxation, 
have as a matter of fact suffered thereby. It is, however, 
certain that excessive constitutionalism does harm. Let us 
again turn to Maryland. The sessions of the legislature are 
biennial and limited to ninety days. Formerly it was said 
that the legislative sessions were excessively long because the 

1 Principal, $7,000,000; interest, $18,574,713.55. 



CONSTITUTIONAL PROVISIONS. 379 

members wanted their ^5 a day. It was said that too many 
local and private laws were passed. All these complaints were 
undoubtedly well founded. We suffer from too much legisla- 
tion, but to part with power cannot effect a cure. As to the 
pay of the legislature, that difficulty can be solved, as it has 
been in New York, by paying each member a fixed sum per 
year, regardless of the length of the session. Local and 
private bills are brought forward still, and consume most of 
the ninety days. Bills in the general interest are likely to 
suffer. Good laws can be put off, by means of the lobby, 
until it is too late to pass them. Bad laws can be passed 
without notice in the hurry and excitement of the last days 
of the sessions which have not inaptly been compared to the 
"close of a Pimlico race, when it is difficult to tell what 
horses have been held back until the whip and spur are 
plied at the critical moment. . . . Certain measures of at 
least doubtful propriety are pushed to the front when it 
is too late to expose them and centre upon them the public 
gaze and disapprobation." ^ 

The ninety-day limitation also tends to make extremely 
difficult any radical improvement. The abuse of local legis- 
lation ought to be remedied by a large and generous but 
properly guarded grant of powers to local poKtical units. 
Now Maryland cities and counties have no independent 
financial existence. A Maryland city cannot even construct 
water-works \vithout a petition to the legislature and legisla- 
tive sanction. Self-help is unknown, and local self- govern 
ment exists in a most imperfect form. We are kept dangling 
on the apron-strings of our Annapolis nurses. What is true 
of Maryland is true of other states. Mayor Hewitt, like 
every honest man who has given attention to the municipal 
government of New York, finds that one of the first con- 

1 Baltimore Sun, editorial, March 22, 1888. 



380 CONSTITUTIONAL PROVISIONS. 

ditions of good administration is a cessation of perpetual 
legislative interference in local affairs. This must, however, 
continue until larger powers of local self-government are 
granted. But to draw up and adequately discuss a proper 
bill for local administration in jMar}'land would require weU- 
nigh the entire ninet\' days of the constitutional session. 
An imperative need in IMaryland is tax reform ; but to dis- 
cuss properly so large a topic as a new system of taxation 
for the state and all the local political units would require 
full ninety days. Local powers are so limited that a Mary- 
land city cannot even order an assessment of property for 
local purposes without legislative authorization 1 We have 
not had an assessment of property since 1876, and many who 
have since then entered the city of Baltimore, or acquired 
wealth, pay little or no taxes, while the rate for 1888 on old 
tax-payers for city and state purposes in Baltimore is $2.07^ 
on the $100 — a very high rate, because a good deal of the 
Baltimore improved real estate is assessed for its full value, and 
many small houses for considerably more than they could be 
sold for. Those who escape taxation oppose any new assess- 
ment, and for this our constitution offers them every facility. 
I protest that here is a case in which a constitution places 
an obstacle in the way not of the whim of the people, but of 
their will, and I venture to assert that such cases will in a 
near future become very frequent. 

We talk much about local self-government, but in all finan- 
cial matters we have less of it than the local pohtical units 
of any of the great European nations. It is a general princi- 
ple in Germany and France that cities have all powers which 
have not been expressly taken away from them. Our princi- 
ple of law is that cities have only those powers which have 
been expressly granted. The EngHsh theory is like the 
American, but the grant of powers to Enghsh cities has 



CONSTITUTIONAL PROVISIONS. 381 

been so generous that the EngHsh practice is essentially 
different from ours. 

It is hard not to believe that one reason for the better gov- 
ernment of European cities is their responsibihty, their self- 
determination, their self-control, their relative independence 
from outside interference. The following newspaper sum- 
mary of the local government bill for the government of 
counties in England and Wales, introduced in the English 
House of Commons on March 19, 1888, will show how 
much greater the degree of liberty to which the English 
have become accustomed in local matters than we know 
anything about : — 

"The bill proposes to establish county councils, to be 
elected directly by rate-payers, which are to have control 
of the county police, to wield the powers now exercised by 
the local authorities over gas and water works, artisans' 
dwelhngs, the sale of food and drugs, and sanitary condi- 
tions, and to make advances in the aid of emigration when 
there is reason to believe that the advances will be repaid. 
The local government board is to retain its present power 
to control the borrowing of money by the counties, and to 
audit the account of counties, and is also to fix the number 
of members of the county councils. Other provisions give 
the councils the oversight of lunatic asylums, work-houses, 
reformatories, and industrial schools, and power to grant 
hcenses for the sale of intoxicating liquors." 

It may be said that excessive constitutionahsm, as devel- 
oped in our states, leads to hasty and ill-considered legis- 
lation. If the courts have large powers of nullification, they 
are relied upon to defeat vicious legislation. People become 
careless and indifferent. A class of men among us give 
enough concern to government to secure the insertion of 



382 CONSTITUTIONAL PROVISIONS. 

limitations to debts and taxation in constitutions and laws, 
and then neglect all the duties of citizenship. 

It may be said, If we give large powers to cities to engage 
in enterprises like the construction of gas-works, water- works, 
electric-light works, and the like, they will be reckless in the 
use of them, or they may even start on the road to socialism. 
I reply, that good local government cannot be found any- 
where apart from local liberty, and that the small advances 
v/e have made in this respect in American states have not pro- 
duced such results as to discourage us. There was a time when 
the county authorities in ^Maryland could not give relief to a 
poor person until a special bill for that particular person 
was passed by the legislature. It led only to abuse, and it 
yet remains to show that a single step taken in the direction 
of local liberty has failed to produce good results. 

The cry about socialism whenever a municipality con- 
structs and operates gas-works, water-works, or even street- 
car lines, is scarcely worthy the attention of sensible men. 
A tendency to socialism can be said to exist only v/here 
there is a movement looking to the absorption of all business 
by government. If government business is separated from 
private by well-drawn lines, and natural monopolies are 
transferred to our various governments, it cannot be said 
that that reveals any tendency to socialism. This so-called 
tendency exists only in the vivid imaginations of timid and 
purely speculative thinkers. Those who imagine that our poli- 
ticians show any inclination to extend the sphere of govern- 
ment business must stand very far from the facts of our life. 
Professor Simon Newcomb, in his " Political Economy," 
distinguishes very properly between the "keep-out" princi- 
ple and the '•' let-alone " principle. The keep-out principle 
means that government itself should not go into any business. 
The let-alone principle or maxim means that government 



CONSTITUTIONAL PROVISIONS. 383 

should let people alone in the management of their affairs. 
What politicians are doing is in violation of the let-alone 
maxim. Their interference with private affairs is far-reach- 
ing and tends to demorahzation. It is, in some respects, 
perhaps, alarming. They will, however, violate the keep- 
out principle only when compelled to do so by strong pres- 
sure from the people. They are far more inclined to inter- 
fere with gas companies than to establish gas-works, or to 
regulate the management of telegraph companies than to 
purchase the rights of companies already existing. With 
what affectation of righteous indignation did the aldermen of 
Chicago resist a proposition which has much to commend 
it, — that the city should take steps looking to the ultimate 
acquisition of street-car lines by the city. They were not 
socialists ! they wanted that understood ! Municipal coun- 
cils and politicians are too much inchned to part with public 
property and abandon public enterprises. This is the only 
real danger. It was the politicians who wanted to sell the 
Philadelphia gas-works, and it was a strong expression of pop- 
ular will which defeated the ring. Special interests, always 
dominant, are opposed to extension of government enter- 
prise, and they are so powerful that such extension can never 
take place unless there are the strongest reasons therefor. 

The few general provisions of a constitution, it seems to 
me, should protect coming generations against extravagance 
and misuse of power on the part of the present ; should, 
while not obstructing action, prevent hasty action, secure full 
publicity, and provide for frequent reference of financial 
measures to the people for approval. The organic law 
ought further to provide general regulation for municipal 
corporations of such a nature as to bring about a larger 
co-operation of business men in the practical affairs of gov- 
ernment, through the means of boards of trade, merchants' 



384 CONSTITUTIONAL PROVISIONS. 

and manufacturers' associations, and like organizations, and 
of citizens generally by means of numerous unpaid and vol- 
untary commissions. Our people stand too far from the 
practical work of government. Berlin is said to be the 
best governed city in the world. Perhaps two of the chief 
reasons for this may be found in its large degree of liberty, or 
local self-government, and in its unpaid commissions, through 
which substantial citizens co-operate with paid officials in 
every part of the government. It is said that ten thousand 
people thus participate in the affairs of local government in 
Berlin. Provision should, in such cases, be made for the par- 
ticipation of women in the work of school commissions and 
poor-relief commissions. It is of real importance to the peo- 
ple of the entire state that no city or other local unit should 
become bankrupt or impoverished. Legislative sanction 
may properly be required for extraordinary and unusual 
expenditures, such as would bring the total debt above, say, 
ten or fifteen per cent, of the total value of the property 
of the city. It is best, as a rule, to refer expenditures to 
the people for indorsement, and to let them within proper 
limits govern themselves and take the consequences of their 
own acts. 

The remainder of this chapter was prepared with special 
reference to Maryland, but it is believed it will be found of 
general importance. 

It is recommended that the legislature submit to the people 
an amendment to the constitution repealing that provision 
of the constitution which forbids all participation of the state 
treasury in internal improvements, and that in place thereof 
it be provided that internal improvements be undertaken only 
after an act of the legislature authorizing them, be approved 
by the people by a majority vote. The people of the state 
can no longer afford to treat themselves as children ; and 



CONSTITUTIONAL PROVISIONS. 385 

unless they learn to trust themselves, the state will continue 
to dwindle in importance between the federal government 
on the one hand, and municipal and private corporations on 
the other. Without borrowing powers and a larger degree 
of liberty in general the people of the state can never resist 
successfully vast corporations. Every constitutional enact- 
ment is a restriction upon the liberty of action, — and re- 
strictions should be few and simple, — indicating the main 
lines of legislation, and preventing rash action. Where cor- 
ruption may be feared, provision should be made for approval 
by popular vote to make legislative action valid. 

This has special reference to the Chesapeake and Ohio 
Canal. There seems to be need of some one to do for 
Maryland with reference to that canal what the Demo- 
cratic statesman, Horatio Seymour, of New York, did for 
the Erie ; namely, settle the question at once and forever 
in favor of state ownership, and make the tolls as low as 
possible, if they cannot be abolished, as in New York state. 
A canal cannot be expected to derive a profit from tolls any 
more than highways ought to be expected to yield a profit. 
Yet to the people at large the enterprise is profitable in 
reducing freight rates and in carrying freight, for the time 
of the canal has not yet passed, and it is eminently suitable 
for certain kinds of freight. This is pertinent to the subject 
of taxation, for thereby we may hope that the industries of 
the state will increase in prosperity, the taxable basis be 
raised, and the rate of taxation lowered. 

It is idle to talk about taking the canal " out of politics," 
if that means turning it over to private parties ; or will some 
one tell me that private railroad corporations are "out of 
politics "? Are they not indeed in politics more thoroughly 
than any state-owned railroads, and often in politics in a 
more demoralizing way than our canals are at present. To 



386 CONSTITUTIONAL PROVISIONS. 

turn the canal over to private parties is equivalent to handing 
it over to a railroad corporation for destruction of its value 
to the injury of the people of Maryland. This has happened 
time and time again in our various states. Canals can exist 
only as state enterprises. England put her canals "out of 
politics," and now it is a live question there to know how 
to get the canals out of railroad corporations. If, to put the 
Chesapeake and Ohio Canal out of politics means earnestly to 
attack the problem of good administration, and to prevent 
its manipulation for party ends, then certainly it ought to 
be taken out of politics, and this is perfectly practicable by 
regulating conditions of appointment, tenure of office, and 
dismissal from office. Business men, through their cham- 
ber of commerce and merchants' and manufacturers' asso- 
ciations, and farmers through some of their associations, 
might be authorized to elect most of the directors, the gov- 
ernor to appoint one, and all appointments to be for six 
years, one-third retiring each two years. Some such arrange- 
ment as this, with rules drawn upon business principles to gov- 
ern the directors in their relations to employes, would forever 
take the Chesapeake and Ohio "out of politics," in the bad 
sense of the word. It is perfectly practicable, because it is 
a thing which has been done elsewhere. Here is a grand 
opportunity for the right man to render distinguished ser- 
vice to Maryland. 

As soon as the question is once settled in favor of state 
ownership of the Chesapeake and Ohio Canal, its business 
will improve immensely. Ohio has passed through the 
same experience, and the governor reports on the subject as 
follows in his annual message, dated January 4, 1887, after 
showing from the report of the Board of Public Works a 
gain of ^30,559.73, as compared with their report of the 
preceding year : — 



CONSTITUTIONAL PROVISIONS. 387 

" This gratifying result is due very largely to the hope 
that has been revived in all who are interested in the canals, 
that they are not to be abandoned or allowed to fall into 
decay and disuse. They constitute a valuable pubhc prop- 
erty. The state should not dispose of any part of them. 
On the contrary, it should be made distinctly the policy of 
the state to improve and uphold them. When this becomes 
7vell understood, the result will be that business upon and 
along them will be revived ; new boats will be built, and their 
great benefits will be made each year mo7'e apparent ^ 

A canal ought to be entirely public property, and it is said 
that for a very moderate sum the claims on the Chesapeake 
and Ohio Canal, which are prior to the claims of the state, 
could be purchased. If it would take a milhon and a half to 
cancel all those claims, a long-time four per cent, loan would 
cost us only a little over ^60,000 a year, and would be offset 
by increased valuation of property. After all, how small 
the sum is, is seen in the fact that more than the entire 
capital required was raised by the federal income tax in 
Maryland in one year without impoverishing any one. It is 
ridiculous to add up the sums which have been spent in all 
the years past on the canal, as if they were lost. It has 
been returned already to the people. Baltimore has spent 
millions upon millions on her streets, and expects to spend 
milhons more, and has not received, and does not desire to 
receive a single cent, in direct returns. These expenditures, 
from which the returns come indirectly in a contented and 
prosperous community, are the most profitable which it falls 
to the lot of a community to make. 

Some able jurists and careful economists think it was a 
grave mistake in the American people to allow their great 
steam highways to become private property. However 
that may be, it is the least that can be demanded, that as 



388 CONSTITUTIONAL PROVISIONS. 

a partial check on the tremendous power thus given into 
private hands to oppress the pubHc, other highways, canals 
included, should belong to the public, and be controlled by 
its agents acting under civil service rules, drawn up on 
business principles. Furthermore, these highways ought to 
be, wherever possible, free from tolls. 

As long as this chapter is, an abstract must be made 
from a letter by Horatio Seymour, dated October 9, 1882, 
in favor of the amendment to the constitution of New York, 
which finally passed and approved, authorized expenditures 
for the New York canals, and made them free. " It has 
been my duty in the course of m.y life to investigate the 
value of our canals. As a member of the legislature, as 
chairman of the Canal Committee, and in messages, I have 
made frequent reports and statements with regard to them. 
I have no interest in their preservation, except my anxiety 
to promote the welfare of all parts of the state, and the 
sympathy I feel for the boatmen, who are struggling for a 
livehhood against railroads. No class of men have served 
the public more than they have, by keeping down charges. 
I remember the discussions ^^ath regard to canajs, when the 
Erie and Champlain canals were made, and the joyous 
celebrations when they were completed, and their wonderful 
influence upon the commercial prosperity of the state. 
Fears were felt that their costs would increase taxation in 
the sections of New York remote from their channels. The 
result was the reverse of this. They gave such growth to 
the cities along their lines that taxation upon other sections 
was reduced. ... In 1842 the question about our canal 
policy engaged the public attention more than any other 
topic, and was the main subject of discussion in our legis- 
lature. I then became convinced that the revenue they 
produced was of very little importance, compared with the 



CONSTITUTIONAL PROVISIONS. 389 

importance of cutting down the cost of carrying out products 
to the markets of the world. I therefore did what I could 
to aid the people of Northern and Southern New York, in 
getting canals made through those sections of the state. . . . 
The spirit which prompts opposition to the amendment is 
best expressed by words which import, that if the counties 
which desire free canals wish to have them made so, let 
them pay the cost. If this feeling is manifest, to what end 
will it lead? It will be said, in return, if such counties 
wish to have their schools supported, ' let them pay the 
costs,' if they desire that their members of the legislature 
or their judiciary should receive their salaries, let them pay 
costs ! This will throw upon such counties a great sum of 
taxation, many times more in amount than their shares of 
making free canals. I deplore a result which would go so 
far to impair the honor and interests of New York. . . . 

" When we break down the protection our public works 
give us, we do not know how far the same influence may 
put up charges upon our commerce which will bring distress 
upon all classes and upon all interests. We are to bear in 
mind that the directors of railroads are the agents and trus- 
tees of stockholders of their corporations, and must respond 
to their wishes, which are apt to be unreasonable and un- 
wise. . . . Canals are not made for the sake of the tolls or 
taxation which they may draw from the people ; on the 
contrary, they are designed for the common benefit of all 
parts of the state, and to add to the profits of farmers, 
mechanics, and other producers, by cutting down the cost 
of getting their products to the markets of the world. 
Another fact should be stated, which shows how harshly the 
Constitution deals with its own canals and with the boatmen 
who toil upon them. If, in consequence of a break in its 
banks, or of a desire on the part of competing routes to 



390 CONSTITUTIONAL PROVISIONS. 

destroy them and the persons who o^vn or navigate boats, 
their receipts should be reduced for a single year below the 
cost of maintaining them, the constitution will not let the 
legislature vote a single dollar to make up such deficiency, 
no matter how small it may be. This hostile and menacing 
attitude of our state towards canals and boatmen prevents 
the building of vessels and their use. It has lessened the 
receipts for tolls, for men will not engage in a business 
where they are liable to be ruined by an accident or by the 
designs of rich competitors. These will find it profitable to 
carry at losing rates for one year, if they can destroy forever 
the boatmen or the canals which keep down their own rates 
for carrying the products of our own people. When they 
have destroyed their competition they can ever after put up 
their own charges to suit their own interest. If relief is 
sought from such action, their agents must be sent into the 
lobby and excite suspicion, which may be unjust, that mem- 
bers are corrupted. When these suspicions become general, 
they will lead to disastrous results." 

It has been suggested that the counties through which 
the canal passes, might without constitutional change acquire 
the Chesapeake and Ohio Canal and improve it. It would 
seem that all parts of the state, like all parts of New York, 
ought to be benefited by a wise canal policy. Possibly 
some counties should make extra contributions, as those 
persons do who derive most from streets in cities. A 
"Union for the Improvement of Canals of the State of 
New York," with headquarters in New York City has been 
formed. Maryland might well follow this example. 

It is conceivable that some special and peculiar reasons ex- 
ist why an exception to the general rule should be made with 
respect to the whole or portion of the Chesapeake and Ohio 
Canal and the whole or part of it be leased for a percentage 



CONSTITUTIONAL PROVISIONS. 391 

of gross revenues to a railroad company. The considerations 
here adduced deserve careful attention, however, and it may 
be well to give attention to plans for the extension of the canal 
to Baltimore. I have the testimony of one of the most 
competent of the United States engineers, a gentleman of 
unquestioned integrity, as to the value of the canal to Mary- 
land, and no hasty policy, afterwards to be regretted, ought 
to be pursued. 

Constitutional provisions ought to be made against any 
irreparable grants of exemption from taxation, and against 
the grant of any power or privilege whatsoever to a corpora- 
tion without reserved rights of repurchase of all corporate 
property of every description by exercise of the right of 
eminent domain. 

Many old charter exemptions from taxation exist in Amer- 
ican states and cities, and they are a perpetual source of 
annoyance and irritation. It may be said that they are 
dangerous to existing social institutions, because they tend 
to lead to indiscriminate attacks on private property. Prob- 
ably the most serious case of the kind in the United States 
is the exemption, by the state of Maryland under an old 
constitution, of the Baltimore and Ohio Railroad from tax- 
ation. Some hold that such exemptions are a violation of 
the fundamental rights of the people ; that no legislature, 
under any circumstances, can part with a sovereign right 
like that of taxation for future generations. It is upheld 
by the Dartmouth College decision, which has, however, 
always met with disapproval on the part of many learned 
jurists. 

The Baltimore and Ohio exemption, which is certain to 
play a disagreeable and demoralizing part in Maryland poli- 
tics as long as it exists, has led one of the Maryland con- 
gressmen, Mr. McComas, to introduce in the House of 



392 CONSTITUTIONAL PROVISIONS. 

Representatives the following proposed amendment to the 
Constitution of the United States : " Whereas, a legislative 
body sitting under a state constitution has no right to sell, 
give, or to bargain away forever the taxing power of a state, 
or by contract to deprive the state forever of the power of 
taxation, and thus destroy the government which it was 
appointed to serve ; and 

" Whereas, in the principle long approved by the Supreme 
Court of the United States, no hindrance can be seen to 
rich corporations making contracts with legislatures as they 
best may, for perpetual exemption from all the burdens of 
supporting the government ; and 

"Whereas, the result of such a principle, under the grow- 
ing tendency to special and partial legislation, is to exempt 
the rich from taxation, and cast all the burden of the sup- 
port of government and the payment of its debts on those 
who 'are too poor or too honest to purchase such immunity ; 
and 

"Whereas, in many states of the Union favored corpora- 
tions now enjoy this immunity from taxation upon many 
millions of dollars' worth of property, rapidly multiplying 
in value, but perpetually free from taxes paid by the people. 
Therefore, 

" Resolved, etc., that the first clause of section ten, arti- 
cle one, shall be so amended as to read as follows : — 

" ' No state shall enter into any treaty, alHance, or con- 
federation ; grant letters of marque and reprisal ; coin money ; 
emit bills of credit ; make anything but gold and silver coin 
a tender in payment of debts ; pass any bill of attainder, ex- 
post-facto law, or law impairing the obligation of contracts ; 
or grant -any title of nobility : Provided, however. That no 
state shall be precluded by the grant of any charter or act 
of incorporation from taxing the capital stock or property 



CONSTITUTIONAL PROVISIONS. 393 

of such corporation ; nor shall any charter or act of incor- 
poration heretofore granted, or that may hereafter be granted, 
by any state be construed to preclude the state from the 
power of taxation ; but the states shall have and retain the 
full power and right of taxation as if the prohibition to pass 
laws impairing the obligation of contracts had never been 
incorporated in this Constitution.' " 

The proper method is so to shape our Constitution that 
the exemption of corporations may be purchased by exercise 
of the right of eminent domain, like real estate, and thus to 
acquire all exemptions at a fair price. It is far better for 
corporations that some such arrangement as this should be 
made. The exemption of the Baltimore and Ohio Railroad 
Company from taxation works injury to the corporation itself 
in many ways. Other countries have already purchased most 
exemptions like this, and that we have, in the United States, 
made no beginning in this direction simply shows how far 
we have lagged behind others in matters of taxation. 

The following provisions of the constitution of Pennsyl- 
vania are to be heartily commended as a move in the right 
direction : — 

" Section i . All existing charters or grants of special or 
exclusive privileges, under which a bona fide organization 
shall not have taken place, and business commenced in 
good faith, at the time of the adoption of this constitution, 
shall thereafter have no vahdity. 

" Section 2. The General Assembly shall not remit the 
forfeiture of the charter of any corporation now existing, or 
alter or amend the same, or pass any other general or special 
law for the benefit of such corporation, except upon the 
condition that such corporation shall thereafter hold its 
charter subject to the provisions of this constitution. 

" Section 3. The exercise of the right of eminent domain 



394 CONSTITUTIONAL PROVISIONS, 

shall never be abridged or so construed as to prevent the 
General Assembly from taking the property and franchises 
of incorporated companies, and subjecting them to public 
use, the same as the property of individuals ; and the exer- 
cise of the police power of the state shall never be abridged 
or so construed as to permit corporations to conduct their 
business in such manner as to infringe the equal rights of 
individuals or the general well-being of the state." — Article 
XVI., sections i, 2, 3, Constitution of Pennsylvania, 1873. 

The following proposed amendments to the constitution 
of Maryland were drawn up by me at the request of certain 
prominent business men of Baltimore. They are partly 
taken from other state constitutions. 

1. Abolition of this part of Article 15 of Declaration of 
Rights, viz. : " But every person in the state, or person hold- 
ing property therein, ought to contribute his proportion of 
public taxes for the support of the government according to 
his actual worth in real or personal property." 

It is proposed that the following provision shall be substi- 
tuted for the above. 

2. There shall be an assessment of all real estate within 
the Commonwealth, taken anew once in three years. There 
shall be an assessment of all other taxable property within 
the commonwealth, taken anew once every year. All taxa- 
ble property shall be assessed at its full, true, selling value, 
without looking to a forced sale. All taxes shall be uniform 
upon the same class of persons or property within the terri- 
torial limits of the authority laying the tax, and shall be 
levied and collected under general laws ; but this shall not 
be understood to exclude such exemptions of property not 
exceeding in value ^1000, or of annual income not exceeding 
^600, as for reasons of pubHc policy or convenience the 
General Assembly shall see fit to make. 



CONSTITUTIONAL PROVISIONS. 395 

3. Abolition of section 34 of Article 3, and substitution 
therefor of what follows : " No debt shall be hereafter con- 
tracted by the General Assembly unless such debt shall be 
authorized by a law providing for the collection of an annual 
tax or taxes sufficient to pay the interest on such debt as it 
falls due, and also to discharge the principal thereof within 
thirty years from the time of contracting the same ; neither 
the credit nor the money of the state nor of any county, 
city, or other local political unit shall be given or loaned to, 
or in aid of, any private corporation or of any private under- 
taking whatsoever; nor shall the General Assembly have 
the power in any way to involve the state in the construction 
of works of internal improvement, nor in granting aid 
thereto, which shall involve the faith or credit of the state, 
except on condition that such works of internal improve- 
ment shall be indorsed by a majority of those voting at the 
next regular state election or at special election provided 
for this purpose, if such shall be ordered by the General 
Assembly." All the rest of section 34, Article 3, to be 
stricken out as useless obstruction, ample safeguards having 
been already provided. 

4. Any county, township, city, or other municipality in- 
curring any indebtedness, shall, at or before the time of so 
doing, provide for the collection of an annual tax sufficient 
to pay the interest and principal thereof within thirty years. 

5. Any city, town, village, or county in this common- 
wealth shall have power to construct and operate gas-works, 
water-works, electric-lighting works, and street-car lines, or 
condemn and purchase the rights in such enterprises of 
existing companies, and to borrow money for this purpose 
under conditions elsewhere provided in this constitution. 
Whenever use is not made of this power, and franchises for 
any of these purposes are sought, and it is decided to grant 



3% CONSTITUTIONAL PROVISIONS. 

them, then these franchises shall be sold at public auction 
for a period not exceeding twenty-one years ; the right to 
repurchase the plant at the expiration of the period of the 
franchise at its then value shall be reserved, but nothing 
shall ever be paid for the franchise itself, it being a public 
grant, the value of which belongs to the public. 



The material presented in the following table and in the remain- 
ing pages of this chapter has been taken for the most part from a work 
to which reference has already been made, entitled "American Statute 
Law," by Frederic J. Stimson, published in Boston, 1886. In this 
work all constitutional provisions in force January I, 1886, in the 
various states are given. As few changes have been made in state 
constitutions since that date, these same provisions are in force at 
present. 



)7 




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TAXES ON PROPERTY, 



INCOME AND LICENSE TAXES. 



APPROPRIATIONS, Etc. 



GENERAL PRINCIPLES. 



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CONSTITUTIONAL PROVISIONS. 397 

3. ADDITIONAL CONSTITUTIONAL PROVISIONS. 

State Finance and Taxation. 

The provisions here added could not well be tabulated, 
and are presented best in this form. It must be constantly 
borne in mind that the following notes must be read with 
the table, as they present simply additional provisions, and 
in a few cases, exceptions to the provisions given in the 
table. And it must further be remembered that these are 
simply constitutional provisions j the statutory can not well 
be collected. 

General Principles. 

A provision of the Vermont constitution has already been 
quoted to the eifect that the purpose for which the tax is 
levied ought to appear of more importance to the commu- 
nity than the money would be if not collected, before any 
law for a tax be enacted. This provision, introduced in 
1777, is still in force. The "state's ancient right of eminent 
domain and taxation is expressly and fully conceded" in 
the constitution of Arkansas ; and in that of Georgia, taxa- 
tion is declared to be an absolutely inahenable sovereign 
right of the state. 

The specification of objects and subjects of taxation shall 
not, according to the Illinois constitution, deprive the Gen- 
eral Assembly of the power to tax other objects or subjects. 

Taxable Property. 

Taxes shall, in Michigan and Wisconsin, be " levied upon 
such property as is described by law." 

Personal property of a resident of Maryland shall be taxed 
where he resides for the greater part of the year, except 
where goods and chattels are " permanently located " ; in 



398 CONSTITUTIONAL PROVISIONS. 

Texas and California all property, except rolling stock, etc., 
of railroads, is assessed where situated. 

In California land and improvements thereon are sepa- 
rately assessed, all mortgages except mortgages by railroads, 
etc., are taxed to the owner, and the property less the value 
of the mortgage to the mortgagor, all contracts to the 
contrar}^ being void. It is provided in the Texas constitu- 
tion that all property of railroads shall be taxed, and such 
as is in towns shall bear its share of municipal taxation. 
The legislature in Maryland are to provide for taxation of 
foreign corporations doing business in the state. 

Exemptions. 

Lots in towns, within one mile of limits to the extent of 
one acre, and lots one mile or more distant to five acres in 
extent, with buildings thereon, used exclusively for religious, 
school, or charitable purposes, are, in Alabama, and may be 
in Missouri, exempt ; in Cahfomia all property exempt by, 
or belonging to, the United States ; in Colorado the increase 
in the value of land caused by the planting of hedges, 
orchards, and forests may for a time be exempted. The 
personal property of every individual is exempt in Minne- 
sota, and may be in Ohio, to the value of $200 ; in Tennes- 
see to the value of $100 ; in Kansas the property of every 
family to the value of $200 ; and household property in 
Louisiana to the value of I500 ; in Texas, ^250. 

Growing crops are exempt in California ; the direct prod- 
ucts of the soil in the hands of the producer, in Texas and 
Tennessee ; and in the latter state such products in the 
possession of the immediate vendee, and also articles manu- 
factured of the produce of the state, except for expense of 
inspection. Supphes for home and farm use are exempt in 
Texas. 



CONSTITUTIONAL PROVISIONS. 399 

North Carolina provides that the following may be exempt : 
wearing apparel, arms for muster, all household furniture, 
mechanical instruments of mechanics, agricultural imple- 
ments of farmers, libraries, and scientific instruments, the 
total exemptions, however, not to exceed in value $300. 

Valuation and Assessment. 

It is provided in the Louisiana constitution that the assess- 
ment of property shall never exceed its cash value ; that 
tax-payers may test the correctness of assessments in court ; 
and that valuation for purpose of state taxation shall be taken 
as valuation for local taxation. Cultivated and uncultivated 
land of the same quality and similarly situated are to be 
assessed at the same value in California. 

Purposes of Taxation. 

In Texas, taxes can be levied for costs of collecting the 
revenue, to protect the frontier, for the erection and repair 
of public buildings, and for the enforcement of quarantine 
regulations ; in New Hampshire and Massachusetts, for the 
necessary defence of the government ; in Louisiana, for the 
erection of levees ; in Georgia and Louisiana, to supply 
Confederate soldiers with wooden arms and legs ; in Ne- 
braska, to provide such revenue as may be needful ; and in 
Missouri and Texas, for pubhc purposes only. In Florida, 
a tax may not be levied to pay interest on bonds of any 
chartered company. In Arkansas, taxes for other purposes 
may be enacted by a two-thirds vote of both houses. 

In Missouri it is provided that all revenue shall go directly 
into the treasury, and appropriations shall be made there- 
from in the following order of priority : first, to pay interest 
on the public debt ; second, certain sum for sinking fund ; 
third, free pubUc school purposes ; fourth, cost of assessing 



400 CONSTITUTIONAL PROVISIONS. 

and collecting ; fifth, payment of the civil Hst ; sixth, the 
support of charitable institutions of the state ; and seventh, 
for the pay of the General Assembly and such other pur- 
poses not prohibited by the constitution, as may seem 
necessary.^ 

Amount of State Tax. 

The hmits of the amount of state taxation for any one 
year, placed by state constitutions, are as follows : in Ala- 
bama, 0.75 per cent.; in Colorado, 0.60 per cent., or 0.40 
per cent, when the valuation reaches $100,000,000 ; in 
Louisiana, 0.60 per cent. ; in Texas, exclusive of tax to pay 
state debt, 0.35 per cent. ; in Arkansas, i per cent. ; in 
Missouri, 0.20 per cent., or 0.15 per cent, when the valua- 
tion exceeds $900,000,000. 

Poll Tax. 

By the constitutions of Ohio and Maryland poll taxes are 
declared oppressive, and are prohibited. 

The following exemptions are made by the constitutions 
of the following states : paupers, in North Carohna and 
California ; idiots and insane persons, in Cahfornia ; the 
aged or infirm, in West Virginiar, North Carohna, Tennessee ; 
Indians not taxed or uncivilized, in California and Nevada. 

In South Carohna no additional poll tax can be levied 
by any municipal corporation or by the state. 

Income and License Taxes. 

Such taxes must be uniform upon each class in Nebraska. 
They cannot be imposed on mechanical or agricultural pui- 
suits, in Texas ; nor upon Hcenses, in Florida ; but may be 
imposed on all persons in Louisiana, except clerks, laborers, 
clergymen, school teachers, those engaged in mechanical, 

1 Hitchcock "American State Constitutions," page 38. 



CONSTITUTIONAL PROVISIONS. 401 

agricultural, horticultural, and mining pursuits, and manufac- 
turers of anything except liquor, tobacco, etc., and cotton- 
seed oil. In North Carolina incomes from property already 
taxed, cannot be taxed. 

Private Appropriations, Claims, and Debts. 

No appropriation of money out of the treasury shall be 
made in any private law, according to the constitution of 
Illinois ; and in Texas no appropriation for private or indi- 
vidual purposes. It is also provided in the Illinois consti- 
tution that the Illinois and Michigan Canal can never be 
sold or leased, except by vote of the people, and also that 
no hen, etc., in the original charter of the Illinois Central 
Railroad shall be released or impaired. New York may not 
sell or lease or otherwise dispose of her canals, and in Mary- 
land, canals in which the state is interested cannot be sold 
unless the sale is ratified by the ensuing legislature. 

The constitution of Louisiana gives the legislature the 
right to grant to a railroad or canal the right of way through 
public land. In Maryland the legislature can appropriate 
no money in payment of a private claim of over $300, unless 
proved before the comptroller and reported on by him. In 
Illinois and West Virginia the legislature may appropriate 
for expenses incurred by private persons in suppressing in- 
surrection or repelling invasion. In New York no claim 
shall be allowed against the state which would be barred by 
lapse of time if made against a private person. 

Internal Improvement. 

The Tennessee constitution provides that a well-regulated 
system of internal improvement shall be encouraged by the 
legislature ; and in Mississippi a board of public works shall 
be established for that purpose. 



402 CONSTITUTIONAL PROVISIONS. 

Miscellaneous Restrictions. 
No appropriation for a bureau of, or to assist or encour- 
age immigration, shall, according to the constitution of 
Texas, be made. 

Loans of Credit. 

In Alabama the state may not be interested in any private 
or corporate enterprise ; in Tennessee the state may not 
issue bonds to a railroad which is in default of payment of 
interest on bonds previously issued, or which has sold them 
below par. Upon vote of the people, North Carolina may 
loan its credit. 

Money. 

The constitution of Texas provides that the state shall 
have no power to issue treasury notes or warrants intended 
to circulate as money. 

Payment of Taxes a Qualification for Voting. 

In Georgia all taxes except for the year of election must 
be paid before one can vote ; in Massachusetts, Pennsyl- 
vania, and Delaware, payment of a state, county, or cit}- tax 
within two years preceding the election is required of a 
voter; in Rhode Island he must have paid all poll taxes 
assessed upon him for a period of two years preceding ; in 
North Carolina, all poll taxes for a period prescribed by the 
legislature ; in New Hampshire no person can vote who is 
excused from paying taxes at his owtl request ; in ]Massa- 
chusetts, however, a person exempt from taxation by law 
may vote ; in Rhode Island he must have paid a tax to the 
amount of one dollar, unless possessed of real estate. 

In municipal elections in Texas, to determine the expen- 
diture of money or the assumption of debt, no person can 
vote who does not pay a property tax in such municipality. 



CONSTITUTIONAL PROVISIONS. 403 

In the Virginia constitution of 1870 payment of taxes was 
made a prerequisite for voting ; but this provision was abol- 
ished in 1882 ; and in South CaroHna an amendment was 
carried in the same year which accomphshed practically the 
same purpose. 

In several states the payment of poll taxes is made a pre- 
requisite for voting by statutory provision. 

Municipal Finance and Taxation. 
General Principles. 

Municipal taxes in North Carolina and Tennessee must 
be levied according to the value of property; in Missouri 
they may be levied on all property subject to state taxation, 
and the valuation may not be greater; in Louisiana the 
valuation must be the same. 

Amount of Municipal Tax. 

The rates of county taxation for one year are limited as 
follows : — 

Arkansas, \ per cent. 

Alabama, \ " " 

Illinois, f " " 

W. Virginia, 95 cents per j^lOO. 

Louisiana, I per cent. 

Nebraska, i^ " " 

New York, 2 " " 

Texas, I " " or one-half of rate of state tax. 

N. Carolina, twice state tax (except for special purpose 
and with special approval of the legisla- 
ture). 

Missouri, ^ per cent, in aggregate where valuation is 

not over ^6,000,000 

A . • . -L 1 i.- • r 6,000,000 

IT P^'' ^^^*- ^" aggregate where valuation is J ^ ; 
between I 10,000,000 



404 CONSTITUTIONAL PROVISIONS. 

Missouri, \ per cent, in aggregate where valuation is j °'*^°°'00<^ 

between 1 30,000,000 

** ■^■^Q per cent, in aggregate where valuation is 

over 30,000,000 

The following taxes, however, are not included in amounts 
limited above : in Alabama, " special taxes authorized by 
law" ; in West Virginia and Arkansas, taxes for free schools ; 
in Illinois, Nebraska, West Virginia, Arkansas, and Texas, 
taxes for debts already incurred ; and in Texas, taxes for 
the erection of public buildings, and taxes for roads and 
bridges, — the former being limited to one-half per cent, 
in one year, the latter to -^-^-^ per cent. 

Municipal corporations may levy a greater rate than the 
above in a few states. The rate may be raised in Loui- 
siana by a vote of the property tax-payers — the tax in 
this state to be for public works ; in Illinois and Nebraska, 
by a vote of the electors of the county ; and in West Virginia, 
by a three-fifths vote of such electors. 

In the following states the rate of taxation in towns and 
cities is limited for any one year as follows : — 

Arkansas, \ per cent. 

Alabama, \ " 

Texas, (for town not having special charter) \ per cent. 

Texas, in cities of over 10,000, 2.\ per cent. 

Missouri, in cities of over 30,000, I " " 

" in cities of between 10,000 and 30,000, -f^ per cent. 
" " " " 1,000 " 10,000, \ " " 

« " " less than 1,000, \ " " 

" in school districts, for school purposes, -^^ " " 

These rates, however, in Missouri, for school purposes, may 
be increased by a vote of the tax-paying voters, and for the 
purpose of erecting pubUc buildings by a two-thirds vote of 
all voters. 



CONSTITUTIONAL PROVISIONS. 405 

Taxes for paying existing or hereafter renewed indebtedness 
are not included in the above Hmited amounts in Missouri, 
Arkansas, and Alabama. 

Purposes Prescribed, 
Every town and city in Wisconsin, according to its con- 
stitution, shall by tax annually raise a sum for the support 
of common schools not less than half the sum received from 
the state school fund; in North CaroHna no tax shall be 
levied by counties, towns, etc., except for necessary ex- 
penses, without a special vote of the electors ; in Arkansas 
the legislature may authorize school districts to levy a tax 
for school purposes not exceeding one-fifth per cent. ; in 
Georgia, counties may levy taxes for schools under special 
authority of legislature and a two-thirds vote of the county ; 
in Texas counties may raise a special tax for common schools 
not exceeding one-fifth per cent. Counties, towns, etc., 
may levy taxes in Texas for current annual expenses, and 
for interest and sinking fund of debts ; in Georgia, for edu- 
cational purposes ; and in Georgia a.nd Mississippi, for the 
building and repair of court-houses, jails, bridges, and neces- 
sary conveniences for the people. 

Special Taxes. 
Betterment taxes must, in Arkansas, be consented to by a 
majority of the property-holders in the locality affected, and 
must be ad valorem and uniform ; and in Cahfornia, must 
be collected before the work is commenced. A specified 
tax may, in Louisiana, be levied for public improvements or 
railroads by vote of the tax-payers. 

Loans of Credit. 
In Maryland no county can loan its credit to any associa- 
tion or corporation except by act of the legislature, ap- 



406 CONSTITUTIONAL PROVISIONS. 

proved by the next legislature after publication in the local- 
ity interested. The Maryland constitution contains this 
special provision regarding the city of Baltimore, viz. : that 
it may not incur debt or loan its credit in aid of any individ- 
ual, corporation, etc., or in the construction of works of 
internal improvement, unless such debt or credit be author- 
ized by an act of the General Assembly and by an ordinance 
of the city, submitted to the legal voters of the city of Balti- 
more and approved by a majority of the votes cast. In 
Iowa no municipahty can become stockholder in a bank ; 
nor in Minnesota and Nebraska, issue bonds or become in- 
debted in aid of railroads for more than ten per cent, of its 
valuation ; in the latter state five per cent, extra, on a two- 
thirds vote of the people. 

The following Hmitations are, however, noted : in Nebraska 
counties, towns, etc., may, by vote of the electors, under the 
authority of law, loan credit, etc. ; in Mississippi, on vote 
of two-thirds of electors and with authority of legislature ; 
in Tennessee, on three-fourths vote of electors. 

Statutory provisions, regarding the above points, are much 
more numerous, but are not given. 



1 



n. 

REVENUES AND EXPENDITURES OF THE STATES. 

I . COMMENTS. 

IN a comparative study of the tax systems of the various 
states, it is necessary to examine not only the provisions 
regarding taxation as found in the state constitutions or 
statutes, but also the results of those laws in operation, to be 
found in the reports of the financial officers of the states. 
An examination of the laws will make plain who should pay 
the taxes and, perhaps, what each should pay, but an exami- 
nation of the budgets of the states will show who really pay 
the taxes, and how much they pay. In this present work, 
however, it will not be possible to make an analysis suffi- 
ciently detailed or extended to show, save in a general way, 
how great the burden of taxation is, upon whom it rests, and 
for what the revenues derived from taxes are expended. It 
is undertaken to give in brief the essential points to be 
gathered from the yearly financial reports. 

This task of analysis — or synthesis, as it has been in some 
cases — has not been an easy one. In the first place, there 
is no approach to uniformity in the methods of keeping or 
publishing the accounts in the various states, nor in the 
classification of receipts and expenditures. In one state, 
for example, all receipts are grouped according to their 
source in one grand list, and so of the expenditures ; in 
another, the receipts and disbursements are grouped accord- 
ing to the funds into or from which they are paid, each fund 



408 STATISTICAL INFORMATION. 

having a separate account ; and in a third, the general plan 
being as in the last, a portion of the receipts pass through 
one fund into another, and are thus mentioned t^vice in the 
column of receipts, and twice in the column of disburse- 
ments. These differences arise from the different methods 
of financial legislation, and are mentioned to show the diffi- 
culty of analysis and classification. There is, it may be 
incidentally remarked, abundant room for reform in the 
methods of keeping state and municipal accounts of reve- 
nues and expenditures. There have been many other things 
to render the work a perplexing one, but the greatest care 
has been taken to avoid errors, and it is believed that the 
facts set forth are trustworthy. 

Because of the difficulty of classification, just mentioned, 
a brief summary of the finances of each state is first given, 
and afterward, such matter as could be conveniently grouped, 
is given in tabular form. 

In collection of these statistics not only have the auditors', 
comptrollers', and treasurers' reports been of assistance, but 
also the "American Almanac," edited by Mr. A. R. Spofford, 
the librarian of Congress. 

2. REVENUES AND EXPENDITURES OF EACH STATE. 

Alabama} 

For the fiscal year ending September 30, 1886, the total 
receipts, exclusive of the amount collected and paid out 
for the public schools in the counties, were ^888,724 ; the 
disbursements, $818,366. Of the total sum received, the 
revenue accruing from a general tax on property formed 

1 Throughout these statements the cents have not been given. If 
however, they were in the reports, etc., fifty or more, $1.00 was added; 
if less, no account was taken of them. 



REVENUES AND EXPENDITURES. 409 

the greater part ; that from hcenses being next in amount. 
The following were the principal receipts : — 

General taxes $655,102 

Miscellaneous licenses 99j47I 

Railroad licenses 12,500 

Insurance company licenses 4>377 

Fees 568 

Purchase and redemption of lands 9>777 

There was also received ^12,099 from the Department of 
Agriculture, being a part of the fertihzer tax, and ^31,939 
from the university land fund, derived probably from the 
sale of university lands. The hire of convicts was the only 
other considerable item, and was more than balanced by the 
expenditure for the same. 

There was a school fund tax, amounting to ^325,000, and 
a poll tax of $1.50 per poll, amounting to 1 150,000, collected 
and paid out in the counties. 

The total assessed valuation in 1885 was $172,528,933: 
that of real estate, $102,037,631 ; of railroad property, 
$22,296,870 ; the rate was 60 cents per $100, butw^as reduced 
in 1887 to 55 cents.^ 

1 It is interesting to notice that the assessed value of dirks, guns, 
pistols, canes, etc., in Alabama greatly exceeds that of farming imple- 
ments, the value of the former being returned as $429,493, while that of 
the latter is returned as only $87,567. A paper on "Taxation in Ala- 
bama," by Mr. W. T. Sanders, of that state, read before the class in 
political economy in Vanderbilt University, lies before me. In this 
essay it is claimed that the reason for this large apparent excess of value 
of warlike implements is the fact that farming implements to the value 
of $25 are exempt from taxation, and the home-made tools, generally 
used, are not regarded as of much value, while every one knows exactly 
what he paid for his dirk or gun, and this can also be ascertained from 
merchants. All firearms are taxable, and in the " black belt," where 
there are six or seven blacks to one white, it often happens that firearms 
are the only pi-operty owned by a negro which the state can reach. 



410 STATISTICAL INFORMATION. 

The cost of assessment and collection of taxes was about 
5 per cent, of sums collected. 

The principal expenditures were: for civil list, ^98,837; 
for payment of interest on bonded debt, ^323,097; for 
charitable and educational purposes, $230,780. 

The sixteenth section fund, belonging to the several 
counties of the state, amounted in September, 1886, to 
^1,820,686. The interest on this amount accrues to the 
benefit of the educational fund. 

The state, besides the interest on this fund, had at this 
date a bonded debt to the amount of $9,193,900, bearing 
interest at 4, 5, and 6 per cent. 

Arkansas. 

In the latest financial report of Arkansas to be had, 1878, 
the total receipts into the general revenue were given as 
about $750,000, more than half of which consisted of loans. 
^128,050 was collected by a property tax; $1622 from 
insurance companies; $11,228 from fees; $12,064 from 
commission sales. The revenues of the school fund were 
chiefly from taxes ; of the permanent school fund, from 
sale of lands, fines, and estrays ; and of the sinking fund, 
from liquor licenses and interest. 

The following statistics are taken from the "American 
Almanac" for 1888: — 

For the year ending October, 1884, the receipts were 
$1,445,120, and the expenditure, $515,605. In 1883 the 
receipts were $830,000; the expenditures $590,000. 

The amount of taxable property in 1886 was as assessed : 
real, $78,444,227; personal, $48,382,167; railroad, $13,- 
704,639 ; total, $140,531,033. 

The rate of state tax was 40 cents on the $100. A poll 
tax of $1 was levied for school purposes. 



REVENUES AND EXPENDITURES. 411 

The amount of the state debt, October, 1885, was 
$2,321,100 principal; past-due interest, ^2,786,943; total, 
$5,108,043 ; mostly bearing interest at 6 per cent. 

There is an additional debt to the amount of $11,000,000, 
consisting of Levee and Railroad Aid bonds and others, the 
former of which have been declared by the Supreme Court 
of the state as unconstitutional and invalid ; the latter have 
been declared illegally issued. 

California. 

There was received into the state treasury for the fiscal 
year ending June 30, 1886, the sum of $6,476,230. The 
principal items were as follows : — 

Property tax $4,222,198 

Poll tax ($2 per poll) 296,919 

State school lands 169,586 

Fees 54,367 

Rent of wharves and collection of tolls .... 247,256 

Rents and privileges (Yosemite Valley) . . . 10,890 

Railway taxes 851,413 

Licenses incorporated banks 12,700 

Sales of jute products 51,680 

Estates of deceased persons 13,210 

Redemption of bonds 288,500 

Interest 228,277 

The disbursements for the same year amounted to $5,787,- 
612. Of this $1,894,487 was for the support of schools; 
$218,812 for educational institutions ; $1,162,045 for chari- 
table and penal institutions; $294,578 for harbor improve- 
ments ; $634,615 in purchase of bonds; $179,380 for 
payment of interest on bonds; and $411,654 as payment 
of county portion of railroad taxes ; and over $800,000 for 
payment of salaries of public officers, etc. 

The total valuation of property for 1886 was $816,446,700, 



412 STATISTICAL INFORMATION, 

of which the personal was $151,937,132, being 24.64 pel 
cent of the real. The state rate of taxation was 56 cents on 
the $100. 

Among the principal items in the list of assessed valua- 
tions were: merchandise, $32,449,166; moneys, $10,874,- 
971 ; solvent credit, $15,428,987 ; mortgages, $98,833,614; 
furniture, $12,426,022; horses, $11,883,980; cattle, $13,- 
541,662 ; sheep, $5,683,083. 

The cost of assessing, auditing, collecting, and paying in 
the taxes was $259,563, or about 5 per cent, of taxes col- 
lected. 

The state school fund had in its possession state and 
county bonds to the amount of $2,549,500. This fund is 
maintained by interest on these bonds ; by poll taxes ; by 
interest on sales of certain lands, the 500,000-acre land 
grant, and sixteenth and thirty- sixth sections land grant ; by 
sale of geological survey reports, and by a percentage of 
the state and railway taxes — chiefly the former. The state 
rate in 1885 was 543^0- cents on the $100, of which 17^0- 
cents was for school purposes. The university fund held 
bonds, bearing 6 and 7 per cent, interest to the amount of 

The funded debt of the state was in 1886, $2,953,500, 
$2,614,000 of which* was held by the state school and uni- 
versity funds, leaving bonds to the amount of $339,500 
only, in private hands. The state funded debt bonds, 
which constitute the greater part of the debt, fall due in 
1893. Thus it will be seen the state is practically out of 
debt. 

The funded debt of the counties amounted in 1885 to 
$7,717,741,1 the floating debt to $667,445. 

1 No account was found of sinking funds, but it is probable that such 
exist. It is very generally true of minor civil divisions as well as of 



I 



REVENUES AND EXPENDITURES. 413 



Colorado. 

This state has over thirty funds among which are distrib- 
uted the receipts according to some prescribed rule. The 
total receipts for the two years ending November 30, 1886, 
were ^1,837,395; the disbursements, $1,515,951. For the 
general revenue a tax of four mills on the dollar was laid, and 
for other specified funds, of i^-J mills, and in addition to 
these, a military poll tax of $1 per capita. The amount 
charged the counties on account of these taxes was, for the 
two years, $1,403,214, but the amount collected for 1885 was 
but 93.30 per cent, of the amount assessed, and for 1886 but 
92.81 per cent. There was received from fees $43,440, and 
from insurance taxes and fees, $37,246. A considerable 
amount is received from sale of land and interest. 

The assessed valuation of all property for 1886 was 
$124,269,710. The expenditures were chiefly in payment 
of salaries, for the building of the capitol, for the state peni- 
tentiary, and for charitable and school purposes. 

The amounts invested for the various funds were as 
follows : — 

Public school fund ^171,567 

Public school land lease 89,784 

State university fund 40,660 

Internal improvement fund 29,894 

Penitentiary land fund 4,085 

Public building land fund 16,626 

The state debt consisted of outstanding warrants bearing 
6 per cent, interest ; certificates of indebtedness, bearing 6 

states that the real debt is less than the nominal. The net or real debt 
is found by subtracting the amount in the sinking fund from the nomi- 
nal debt. The bonds of a Maryland debt were recently wholly in the 
sinking fund. 



414 STATISTICAL INFORMATION. 

per cent, interest ; and loco weed certificates unredeemed ; 
in all ^666,874. But there was sufficient revenue in the 
treasury to meet all the debt save ^110,379. The state 
constitution prohibits the legislature from creating a debt 
in advance of appropriations, beyond the amount provided 
for by taxation, and consequently the state has no bonded 
debt. 

Connecticut. 

The receipts from revenue for the fiscal year ending June 
30, 1886, were 11,813,702, the principal items being the 
following : — 

State tax from towns $437,472 

Military commutation tax 102,472 

Tax on railroads 626,199 

" " insurance companies 225,484 

" " savings banks 200,590 

" " express companies 8,675 

" " telegraph and telephone companies . . . 6,926 

" " non-resident stock 7i>549 

" " insurance agents of other states .... 22,585 

The expenditures for the same period amounted to 
$3,249,597, over one-half being in payment of interest and 
in purchase of bonds. 

The amount of property, personal and real, as assessed 
for 1886, was ^349,977,339. The rate was 12^- cents on the 
$100. A tax of one per cent, is levied on railroad com- 
panies on the market value of all stock, plus the market 
value of funded and floating debt, less amount of cash on 
hand.i 

1 This percentage was derived by a calculation based on published 
returns. The Connecticut system is thus described in the " Report of 
the Special Tax Commission," made January, 1887: — 

" The present system assumes, with certain minor modifications, that 



REVENUES AND EXPENDITURES. 415 

The treasurer holds in custody for the Town Deposit 
fund, ^18,824, on which the interest received is paid to 
the several towns. There is an Agricultural College fund 
invested in bonds and mortgages, amounting, in 1886, to 
$135,000. There is also a large school fund, the interest 
thereon for the same year amounting to $172,100. 

The amount of the funded state debt, July i, 1886, was 
$4,271,200; $1,030,000 five per cent, bonds, $1,500,000 
of three and one-half per cents., and $1,740,000 three 
per cents. 

Delaware. 

There is no state valuation of property, and all state 
revenues are derived from other sources. The following 
were the principal receipts of the general revenue for 1886 : — 

Railroads $41,528 

Licenses (less amount to school fund) 45A^3 

Interest 24,000 

Dividends from banks 4^545 

Fees 1,120 

Inheritance tax 913 

The total receipts into this fund were $121,190; the dis- 
bursements, $120,028. The chief items of expenditure were, 
interest on bonds, $37,000 ; salary of officers, $33,000 ; and 
for free schools, $30,000. 

The school fund investments in bank stocks, bonds, etc., 
amounted to $495,749. This fund receives also a part of 
the license fees; its share in 1886 was $12,500. The state 

the market value of the stock and bonds and floating debt of a railroad 
company represents the taxable value of the property itself, and that 
a tax of one per cent, upon that property is practically the average 
rate that it would pay, if assessed, bit by bit, in each town that the line 
passes through." 



416 STATISTICAL INFORMATIOX. 

had- ^73, 050 invested in bank stock, and had 3600,000 on 
loan. 

The state indebtedness January i, 1887, was $824,750, as 
follows : outstanding bonds bearing interest at 4 per cent., 
$585,000; school bonds at 6 per cent., $156,750 ; amount 
on which interest at 6 per cent, is paid Delaware College, 
$83,000. But the state is practically out of debt, as it holds 
interest-bearing securities to the amount of 31,168,799. 

Florida. 

The state treasurer's report for the year ending December 
31, 1886, shows the total receipts on account of general 
revenue to be $383,843, and chiefly from the following 
sources : — 

License tax . $130,420 

General tax 246,890 

Auction tax 538 

Commission taxes 4>i75 

The expenditures on the general revenue account 
amounted to $534,466. Of this amount 327,734 was 
paid for the collection of revenue ; for salaries of execu- 
tive, judicial, and legislative departments, $130^000; for 
jurors and witnesses, $149,470; for educational institutions, 
$18,000 ; and for interest on the bonded debt, $79,954. 

For the support of pubHc schools a tax of one mill is 
levied an4 paid out to the treasurers of the different coun- 
ties, amounting, in 1887, to $72,361. 

There are several educational funds, fed chiefly by sale of 
lands and interest on bonds. The amount of bonds in the 
various funds December 31, 1887, was as follows : — 

In the Agricultural College fund $155,800 

" Common school fund 532,284 



J 



REVENUES AND EXPENDITURES. 417 

In the Seminary fund ^92,300 

" Sinking fund (Bonds of 1 871) 77j900 

1873 I50»300 

. Total ;^i,oo8,584 

The bonded indebtedness of the state is represented by 
^350,000 bonds of 1871, bearing 7 per cent, interest, and 
^925,000 bonds of 1873, bearing 6 per cent, interest ; in all, 
^1,275,000. But all save $411,300 is held by the funds 
named above, so that the outstanding indebtedness is not 
large. 

The "American Almanac" gives the amount of taxable 
property assessed for the year 1887, ^76,611,409, and the 
rate for the year ending December 31, 1884, 40 cents on 
every $100. As above stated, one mill on the dollar or 10 
cents on every |ioo goes to the benefit of pubhc schools. 

Georgia. 

For the fiscal year ending September 30, 1886, this state 
has an unusually large budget. The receipts for 1885 were 
$1,533,320, and for 1886, $4,220,130; the expenditure for 
1885, $1,441,338, and for 1886, $4,453,393. This in- 
crease is due to a refunding process, the state selling bonds 
to the amount of $2,508,850, and paying upon the public 
debt $3,103,392. The chief items of revenue are : — 

General tax •,.,.. $871,130 

Railroad tax 95>52i 

Capital tax 150,223 

Insurance tax 21,362 

Privilege taxes 176,417 

Telegraph, telephone, and express companies . . 5,118 

Liquor licenses 67,881 

Fees 78,405 

Rent of West Point and Atlanta R.R 300,000 

Bank of Rome 18,749 



418 STATISTICAL INFORMATION. 

The chief expenditures are on account of public debt, 
civil establishment, new capitol building, schools, and asy- 
lums. 

The assessed value of all property was $329,489,505 ; 
lands, and city and to%Mi property, $182,366,292 ; railroad 
property, §22,981,927 ; personal property, $124,141,286. 

The rate of the state tax for 1886 was 35 cents on the 
|ioo. 

The bonded debt of the state outstanding October i, 
1886, was 89,052,620, the larger issues bearing interest at 4I-, 
6, and 7 per cent. 

Illinois. 

The revenues of this state are derived chiefly from taxes and 
a percentage (7 per cent.) of the gross earnings of the Illi- 
nois Central Railroad. Of the total amount — $4,666,444 
— received into the general revenue fund, for the two years 
ending September 30, 1886, $3,774,363 was derived from 
taxes, $725,208 from the gross earnings of the Illinois Cen- 
tral Railroad, and $150,887 from fees. There was also 
received from the tax on property, for the use of the school 
fund, $2,164,739, of which amount there was disbursed 
$2,132,084. 

The total expenditure for the same period from the gen- 
eral revenue fund was $5,122,800. Of this amount $618,861 
was paid as salaries of officials; $309,242 to the members 
of the general assembly; $353,652 for the completion of the 
state house; $2,353,106 for charitable institutions; and 
$244,120 for educational institutions. 

The total equalized value of all property, personal and 
real, for 1886 was $726,178,132; of railroad property and 
capital stock of other corporations, $66,728,678. The ag- 
gregate equalized value was $793,563,498, 79.77 per cent, 
of this being real, and 20.23 per cent, personal. 



REVENUES AND EXPENDITURES. 419 

The rate of taxation for the same year was, for state pur- 
poses, 2 1 cents on every $ioo, and for state school pur- 
poses, 14 cents, making a total rate of 35 cents on every 
$100. 

The state pays an annual interest to the school fund, 
amounting to $139,848 in the two years named, and to the 
local bond interest fund, $2,779,038, in the same years. 

The state tax is small compared with the total taxes col- 
lected for all purposes. In 1885 the state tax was $3,485,- 
083, the county tax $5,024,407, the city tax $7,383,462, the 
town and district and local taxes were $12,017,757, the 
registered bond tax $1,535,220, a total of $29,445,931. 

The state has really no bonded debt. All bonds have 
been called in and cease to draw interest, but the principal out- 
standing amounted, October i, 1886, to $23,600. The state, 
however, as has been noted, pays a large sum annually to 
the counties, etc., as interest. 

The local indebtedness is given as follows : — • 

Counties $12,579,985 

Townships 7,252,048 

Cities, villages, and incorporated towns . . , 19,621,675 

School districts 2,047,137 

Total $41,500,843 

hidiana. 
In this state there are numerous funds, chiefly unproduc- 
tive, among which the receipts are distributed. For the 
fiscal year, ending October 31, 1887, the receipts into the 
general fund were $2,373,043 ; into the school fund $2,127,- 
946; into the new state house fund $168,159; into other 
funds $69,047; a total of $4,738,198. Of this amount 
there was received from the state tax $2,709,635, or more 
than one-half. There was also an additional sum of $32,- 
566 for the support of inmates of asylums, etc. 



420 STATISTICAL INFORMATION. 

Among other sources of revenue were the following : — 

Fees (insurance) . $23,547 

Fees (court and other sources) 15,386 

Insurance tax 61,985 

Express company tax 366 

The total may be somewhat misleading, as in it are in- 
cluded some transfers from one fund to another. Thus the 
sum ^351,430, a payment of interest on bonds, figures in 
the expenditure column of the general fund, and in the 
receipt column of the school fund. It has not been found 
convenient to re-group the receipts and expenditures, and 
they are therefore given as found. 

The expenditures for all purposes were $4,774,226. 
From the general revenue fund the chief disbursements 
were : for pay of public officers, clerks, etc., $361,802 ; 
for benevolent and penal institutions, $965,155 ; and for 
educational institutions, $58,360. 

The amount of taxable property as assessed for 1885 — • 
as given by the "American x^lmanac " — was : real, $566,521,- 
981; personal, $227,004,098; total, $793,526,079. The 
rate of state tax, 12 cents on each $100. There is a capi- 
tation tax of 50 cents per poll for state purposes. 

The domestic bonded debt of the state was, October 31, 
1887, $4,388,783; the foreign debt, $2,041,826; total, 
$6,430,608. The domestic debt consists of non-negotiable 
bonds held by the school fund, Purdue University, and 
Indiana University. 

loiva. 

The total receipts for the two years ending July i, 1887, 
were $3,327,981 ; the expenditures for the same period, 
$3,511,500. The state tax of two and one-half mills on the 
dollar was the chief source ; the amount received for the 



REVENUES AND EXPENDITURES. 421 

two years named being $2,359,883. Among other revenues 
the following are the more important : — 

Insane dues from counties $411,840 

Other dues for charitable institutions 80,461 

Pedlers' Hcenses 2,195 

Insurance taxes 140,355 

Fees (insurance) 51,248 

Other fees 16,154 

Telegraph and telephone taxes 22,552 

Railroad commission tax 40,302 

The chief items of expenditure are, beside the civil list, 
schools, penitentiaries, charitable institutions, the militia, 
and the capitol building, that for charitable institutions be- 
ing nearly one-third of the total expenditure. 

The total equalized value of all property for 1887 is given 
as $501,369,744: of real, $349,213,676; of personalty, 
$101,665,098; of railroad property, $38,722,761. The rate 
as already stated was two and one-half mills on the dollar. 

The taxes assessed for all purposes in the state, for 1885, 
were $14,430,547, the state tax being but $1,201,791. 

The state has a permanent school fund amounting, June 
30, 1887, to $4,187,893. Of this, the several counties held 
$3,940,487 ; the amount in 8 per cent, state bonds was 
$245,435 ; the remainder consisted of contracts for real 
estate sold, and cash. There are two or three other funds 
to which the proceeds of the sale of certain lands accrue. 

The state has no debt except the one of $245,435 to the 
school fund. This is a permanent debt, and the state is 
responsible only for the annual interest of 8 per cent. 

Kansas. 

For the fiscal year ending June 30, 1886, the amount re- 
ceived into the state treasury on all accounts was $2,566,624. 



422 STATISTICAL INFORMATION. 

Of this amount, 11,082,476 was derived from taxes ; $118,815 
from the penitentiary; and $50,863 from the insurance de- 
partment as hcense fees. The greater part of the remainder 
was received from the sale of lands and as interest. 

The disbursements for the same period were $2,727,701, 
and were principally as follows : — 

General revenue warrants paid ^1,190,140 

Sinking fund warrants paid 45,776 

State bonds paid 83,000 

School warrants paid 1,026,492 

Educational institution warrants paid 130,292 

State house fund warrants paid 128,242 

The total assessed valuation of all property for 1886 
was $277,110,683: of real, $189,635,722; of personal, 
$55,491,779; of railroad property, $32,453,776. The rate 
of taxation was 4yig- mills on the dollar. 

In 1885 the amount of state taxes was $1,044,939 \ of 
county taxes, $2,863,258 ; of city taxes, $950,047 ; of town- 
ship taxes, $981,841 ; of school district taxes, $3,049,936; 
in all, $8,890,024. 

The several state funds are possessed of bonds as fol- 
lows : — 

Permanent school fund $3,600,323 

Normal school fund 61,595 

State University fund 91,153 

State Agricultural College fund 384,189 

State Agricultural College note fund 71,726 

Sinldng fund 21,000 

The state has a bonded indebtedness to the amount of 
$847,500; but of this amount, in June, 1886, only $273,000 
was held by individuals or corporations, the remainder be- 
ing held by the funds above mentioned. The municipal in- 
debtedness of the state for 1886 is given as $17,779,299. 



REVENUES AND EXPENDITURES. 423 



Kentucky, 

In the state auditor's report for the year ending June 30, 
1887, the total receipts on account of general revenue are 
found to be $Ty,0'^^,(iT^^ (this sum, however, includes a trans- 
fer from other funds of ^150,000). Nearly two-thirds was 
received from the general tax. The chief receipts are the 
folllowing : — 

Sheriffs' revenue or general tax ^1,845,461 

Railroads 148,082 

Insurance companies 79, 118 

Insurance bureau 26,629 

Telegraph companies 3,ooi 

Banks, state and national . • 100,887 

Distilled spirits 17,955 

Lotteries 4,000 

Turnpike dividends 26,686 

Licenses (chiefly liquor licenses) ....-., 276,704 

There was received also from a fund termed the " trustee 
jury fund," ^164,174, collected as fines, fees, etc. 

For the same period the expenditures from the general 
fund are given as ^3,058,578. There was paid in salaries, 
^154,949; to the school fund, ^919,111; to the sinking 
fund, ^181,250; for criminal prosecutions, ^190,869; and 
to assessors, ^128,036. A considerable sum was paid out 
for penitentiaries, which was partially balanced by receipts 
from them. 

There was received into the school fund (white) beside 
above transfer, a slight tax on billiards, cards, dogs, and the 
banks, and interest on bonds, amounting to ^176,248; and 
into the school fund (colored), ^12,545, from sheriffs' reve- 
nue, fees, etc. 

The assessed value of real property for 1887 was ^351,- 



424 STATISTICAL INFORMATION. 

157.053; of personal, $132,334,637; of railroad property, 
^33,722,621; total, $517,214,311. The rate for 1887 was 
47|- cents on every $100 ; for 1886 the tax levy was 51 cents. 
The state has a bonded indebtedness amounting to 
$694,000 ; but the Agricultural College fund holds $165,000 
of it, and the outstanding indebtedness is but $509,000. 
There are, beside these, state and county bonds amounting 
to $1,705,946, drawing six per cent, interest; but they are 
irredeemable, and constitute an inviolable fund. To meet 
the interest on the above indebtedness, the state has stocks, 
etc., in the sinking fund to the amount of $710,744. The 
state, therefore, has practically no debt. 

Louisiana. 

This state does not seem to have very efficient machinery 
for a prompt collection of taxes, as on the treasurer's books 
for 1883 appear returns from taxes laid in 1867. The re- 
ceipts for the fiscal year ending December 31, 1883, were 
$1,907,152. From taxes proper was collected $1,108,755 ^ 
from poll taxes (back), $1,073 ^ from license taxes, $273,918 ; 
from levee taxes, $148,061; from lotteries, $40,000; from 
sale swamp lands, etc., $167,594; from fees, $18,919; and 
from interest on taxes, $42,759. 

There was expended for the same period, on account of 
all funds, $1,349,964. 

The commissions of collectors, etc., amounted to $69,894, 
or about 4 per cent, of collections. 

The following statistics are taken from the " American 
Almanac " : — 

Amount raised by taxation during the year ending Janu- 
ary i, 1888, $1,565,119 ; from hcenses, $265,000 ; from auc- 
tion sales, $2285; from poll tax, $7959; from property 
tax, $1,215,000. 



REVENUES AND EXPE^YDITURES. 425 

Amount of taxable property as assessed for 1886 : real, 
^149,145,874; personal, $63,579,590; total, $212,725,464. 
The rate of state tax for 1886, was six mills on the dollar. 
A poll tax of $1 is levied for school purposes. 

The state debt. May i, 1887, was $11,982,621 funded, 
drawing interest at 4 per cent. 

Maine. 

For the year ending December 31, 1887, the total re- 
ceipts were $1,161,980 ; the total expenditures, $1,168,544. 
Nearly two-thirds of the total revenue was deri\-ed from 
taxes. The following items are taken from the treasurer's 
report for 1887 : — 

State tax $743,113 

County taxes (for state purposes, probably) . . . 9,964 

Railroad tax 89,797 

Savings bank tax 256,430 

Insurance company tax 17,294 

Telegraph and telephone company tax 7j700 

License fees 11,482 

Shore rents 3j9I4 

Duties on commissions 2,733 

Maine Benefit x\ssociation 3,ii8 

The expenditures of the state have not been classified, 
but are found to be confined to the ordinary purposes, viz. : 
civil establishment, schools, and charitable and penal insti- 
tutions. 

The assessed valuation of property for 1886 is given: 
real estate, $148,489,142; personal, $60,220,239; total, 
$208,709,381. The rate of taxation for 1886 was 3^ mills 
on the dollar, for 1887 but 2 J mills, one mill of which was 
returned to the various towns of the state for school pur- 
poses. 



426 STATISTICAL INFORMATION. 

The total liabilities of the state, January i, 1888, were 
;^5,355,077 ; of this, the bonded debt was $3,959,000. The 
state holds in trust certain funds amounting to nearly 
^750,000, upon which interest is paid. Interest-bearing 
loans constitute the remainder of the indebtedness. 

There was in the sinking fund, December 31, 1887, bonds 
of the United States, ^Massachusetts, and New Hampshire, 
amounting to $947,800, and $1860 cash. During the year 
1887 the treasurer cancelled all Maine bonds held in the 
sinking fund, to the amount of $1,162,000, and beside, pur- 
chased and cancelled others amounting to $36,000, leaving 
the bonded debt of the state as above given. 

Maryla7id. 

There was received into the treasury of this state during 
the year ending September 30, 1887, $2,440,363 ; and there 
was paid out $2,374,916. The chief receipts were from — 

Taxes from collectors $864,763 ^ 

Taxes from incorporated institutions 70,586 

Taxes from state and state stocks 44.439 

Licenses 521.310 

Taxes on commission of executors, etc 50,855 

Taxes on collateral inheritances 45'597 

Taxes on gross receipts of railroad companies . . 52,433 

Fees 11,949 

Fines 14,811 

Dividends from banks, etc 118,934 

Interest (from certain railways) 94,200 

Debenture scrip of P. & R. R.R 45,000 

There was expended for salaries of civil officers, $27,295 ; 
for various colleges, academies, etc., $43,565 ; for payment 

1 Taxes from collectors mean the receipts from the general state tax 
of i8| cents on the $100 of all property. 



REVENUES AND EXPENDITURES. 427 

of interest on the public debt, $551,836 ; on account of free 
schools and state normal school, $509,959 ; for the judiciary, 
$96,540 ; and for charitable institutions a very considerable 
sum. 

The assessed valuation of all property, real and personal, 
for 1887 was $485,839,772 ; corporation property, $61,311,- 
375. The state rate of taxation for 1887 was i8f cents on 
every $100. 

The amount of stocks and bonds held for the use of the 
school fund, September 30, 1887, was $310,986, and in 
the sinking fund there were stocks amounting to $2,144,216. 

The funded debt of the state on the date named, was 
$10,960,535, bearing, 5, 6, and 3.65 per cent, interest. Sub- 
tracting the productive stocks held by the state and sinking 
fund, the net debt is $5,661,234. The state holds, as an 
offset, unproductive stocks amounting to $28,268,781, and 
$1,876,025 due from accounting officers and incorporated 
institutions. 

Massachusetts. 

The receipts on account of revenue for the year ending 
December 31, 1886, amounting to $8,748,652, were derived 
chiefly from the following sources : — 

State tax $1,499,805 

Corporation tax 2,227,579 

Bank tax (savings and national) 2,398,267 

Insurance company tax 326,336 

Licenses (insurance) 22,923 

(liquor) 303J98 

" (hawkers and pedlers) 18,029 

" (coal and mining companies) .... 4>777 

Fees (court, clerks, etc.) 30>949 

Income from Hoosac Tunnel 383,765 

Foreign railway company tax 22,919 

Interest on deposits 40,614 



428 STATISTICAL INFORMATION. 

The payments on account of revenue for the year 
amounted to 59,317,609. Of this, over $2,000,000, received 
as corporation tax, ^vas paid out to towns or counties ; 
|i, 250,000 was used in payment of a loan; $597,864 was 
paid to the various departments, executive, judicial, and 
legislative ; $512,017 to the charitable departments ; $87,948 
for educational expenses; $461,771 to reformator}^ and 
correctional institutions; $376,339 for pubhc buildings; 
$75,000 for certain improvements, etc. 

The receipts on account of funds for the year were 
$4,316,704; the expenditures on account of same were 
$5,528,247. 

There was in the school fund, January i, 1887, $2,715,- 
944 ; and in others, exclusive of the sinking fund, $632,056, 
consisting of state securities, county and town securities. 
United States and railroad bonds, cash, etc. 

There was in the sinking fund $18,964,412, the greater 
part of it being invested in state and county, city and town 
securities. 

The total assessed valuation of propert}-, January i, 1887, 
was $1,847,531,422: of real, $1,340,493,673; of personal, 
$507,037,749. The rate for 1886 was 86j\ cents on $1000. 

The total taxes raised in the state for state, county, city, 
and to^^Ti purposes, for the year ending ]\Iay i, 1888, 
amounted to ^26,701,437, or about S13.75 per capita. No 
less than 91 per cent, of this was levied for municipal pur- 
poses. 

The state debt. Januar}- i, 1886, was $31,429,680 funded, 
all of which, with the exception of a small sum, bears in- 
terest at 5 per cent. The entire debt matures by the year 
1900. 



I 



REVENUES AND EXPENDITURES. 429 

Michigan. 

This state has a general revenue fund, numerous educa- 
tional funds, and other funds, and the numerous transfers 
from one to the other of these funds make the analysis of 
the budget a somewhat difficult one. For the year ending 
September 30, 1886, the total receipts were, according to 
the treasurer's report, ^3,046,999, of which ^2,179,711 was 
received into the general revenue fund. The chief items of 
receipt were : from taxes, ^1,669,686 j from fees, $17,313; 
from interest, $32,784; from sale of state lands, $31,522; 
from delinquent taxes, redemptions, etc., $192,592 ; and 
from miscellaneous sources, $9579. There is also included 
in this sum transfers to the amount of $219,344. The ex- 
penditures from this fund for the same time were $2,018,143, 
and principally for the following purposes : for the expenses 
of state government, $141,947 ; for the judiciary, $5093 ; 
for salaries, $256,705 ; for colleges and schools, $203,711 ; 
for institutions, etc., $361,604 ; and on account of appropria- 
tions, $468,400. 

To the specific tax fund w^ere paid the taxes on corpora- 
tions, amounting to $812,711. Of this amount railroad com- 
panies paid $619,399; fire insurance companies, $91,364; 
hfe insurance companies, $33,392 ; and mining companies, 
$47,565. These receipts were transferred to other fimds. 
The remaining funds are fed chiefly by the sale of lands and 
interest. 

The total amount of taxable property as assessed in 1887 
is given as $849,921,063 ; the rate of taxation 12.72 cents on 
each $100. 

The outstanding bonded debt of the state, September 30, 
1886, was $243,149, of which $12,149 was past due, and 
not bearing interest, and $231,000 due in 1890, bearing 
interest at 7 per cent. 



430 STATISTICAL INFORMATION. 

There is beside a trust fund debt of ^4,511,934, upon 
which the state pays interest for educational purposes. To 
meet indebtedness, there was in the sinking fund at the 
above date ^231,000 invested in United States 4 J per cent, 
bonds. 

Minnesota. 

The receipts into the treasury of this state for the year 
ending July 31, 1887, were ^2,476,530, and were as follov»^s : 
from the counties, ^1,201,223 (the tax for state purposes 
amounted to but $642,883, the remainder was for school 
and internal improvement purposes) ; fromi railroad compa- 
nies, $675,745 ; from insurance companies, $98,365 ; from 
telegraph and telephone companies, $10,540 ; from stump- 
age, $38,403 ; from school text-books, $36,328 ; and from 
miscellaneous sources, $415,926 (under "miscellaneous" 
are included chiefly fees from inspection, etc., interest, and 
penitentiary receipts). 

The expenditures for the same period were $2,759,815. 

The amount of taxable property assessed for 1887 was : 
real, $382,337,464; personal, $87,494,258 ; total, $469,83 1,- 
722 ; the rate of state tax, 13 cents on the $100. The taxes 
for all purposes, state, county, and town, as given by the 
"American Almanac," have averaged 17.3 mills on the $1, 
or $1.73 on the $100. 

The state loans, represented by bonds, consisted, July 31, 
1887, of $3,964,000 railroad adjustment bonds, of which the 
permanent school fund held $1,981,000, and the permanent 
university fund, $280,000, the balance being held by outside 
parties. The permanent school fund, the university fund, 
and the internal improvement fund, together hold bonds 
amounting to $4,727,783, there being, as just stated, $2,261,- 
000 invested in state bonds. It is thus seen that the bonds 
held by these funds more than equal the state debt. 



REVENUES AND EXPENDITURES. 431 

Mississippi. 

For the fiscal year ending December 31, 1887, the total 
receipts into the state treasury were ^1,069,568, as fol- 
lows : — 

State tax ^414,775 

Privilege tax 142,649 

Insolvencies 563 

License to retail liquors 109,450 

Swamps and overflowed land fund 6,379 

Internal improvement fund 2,820 

General state fund 10,904 

Chickasaw school fund 1)439 

Special insurance tax 309 

Railroad privilege 140,316 

Sale of bonds 211,300 

Sale of lands 7>oc)4 

Miscellaneous 450 

Expenditures were principally for the following purposes : 
judiciary, ^82,216 ; executive, ^34,387 ; common school fund, 
^232,624; interest Chickasaw school fund, ^64,154; for 
educational institutions, ^118,497 ; insane asylums, $94,673 ; 
railroad tax distributed, $93,446 ; commission for assessing 
all taxes, $31,996 ; principal on loan, $175,000. 

The amount of property assessed, 1887, was: of realty, 
$90,270,135; of personalty, $39,617,119; total, 129,887,- 
254. The state tax on property was 3^ mills on the dollar. 
The number of polls liable to taxation were 193,445. 

The total state debt, January i, 1888, was $3,752,904. 
From this amount it is necessary to subtract the amounts 
due the Chickasaw school, the seminary, and common school 
funds, because the debt to these is permanent and invio- 
lable, and also the amount of the agricultural land script 
fund which must be permanently refunded or invested. This 
makes the real debt only $1,345,246. 



432 STATISTICAL INFORMATION. 



Missouri. 

There was received from all sources during the year end- 
ing December 31, 1886, $3,425,562, the receipts on account 
of the state revenue and state interest funds, $3,202,007, 
constituting the greater part of this sum. The receipts into 
the treasury on account of these funds just named are 
grouped under three heads : — 

From counties $3,035,820 

" railroad, bridge, and telegraph companies 78070 

" miscellaneous sources 87,817 

Under the latter head are included taxes on incorpora- 
tions, of $43,345 ; on insurance companies, of $22,619 ; and 
fees amounting to $5213. 

State Hcenses paid by dramshop keepers amounted to 
$151,477, but it does not appear from the treasurer's state- 
ment that they were paid into the treasury. 

The taxes levied for 1886 for the state were : on real 
estate and personal property, $2,820,271 ; on railroad, tele- 
graph, and bridge companies, $198,398; on merchants and 
manufacturers, $186,357; in all, $3,205,026. There does 
not seem to be close correspondence between the sums lev- 
ied and the sums collected from the various sources. No 
explanation has been discovered and the facts are given as 
found. 

The principal expenditures for the year from the revenue 
fund were : for pay of civil officers, $199,883 ; for assessing 
and collecting the revenue, $145,345 ; for costs in criminal 
cases, $149,262 ; for support, etc., of penitentiary, $100,000 
(more than covered by receipts on account of) ; for educa- 
tional institutions, $79,000; and for asylums, $244,901. 

The total assessed value of real estate for 1886 was 



REVEA'UES AND EXPENDITURES. 433 

^518,803,118; of personal property, $181,133,128; total 
taxable wealth, exclusive of railroad and telegraph property, 
$699,936,246. The assessed value of the property of rail- 
road, telegraph, and bridge companies was $42,847,264. 
The rate of taxation for state purposes was 40 cents on 
the $100. The county revenue tax was $4,287,396 ; the 
county interest and sinking fund taxes, $2,459,156 ; the 
school taxes, $3,555,191 ; road, bridge, and drainage taxes 
$361,618; and township taxes, $389,725 ; in all, $14,258,113. 

The cost of assessing and collecting the state taxes was a 
little over four per cent. 

The state school fund amounted, December 31, 1886, to 
;^3, 134,440, and the state seminary fund to $519,095; all 
but $440 of the former and $95 of the latter being invested 
in state bonds, bearing 5 and 6 per cent, interest. 

The amount of the state bonded debt at the above-named 
time was $10,527,000, bonds amounting to $1,276,000 hav- 
ing been redeemed and cancelled during the two years. 

Nebraska. 

The revenue of this state is derived from taxes, fees col- 
lected by state officers, and from insurance companies, sale 
of lands, and interest. 

The following statistics for the two years ending December 
I, 1887, are taken from the " American Almanac " : — 

Total receipts $3,323,844 

Total expenditures 2,822,308 

The amount raised by taxation for the year ending De- 
cember I, 1887, was $1,305,660. 

The amount of taxable property assessed, 1887, was : real, 
$96,358,889 ; personal, $40,546,015 ; railroad, $23,601,362 ; 
total, $160,506,266. The rate of the state tax was 81.25 
cents on the $100. 



434 STATISTICAL INFORMATION. 

The amount of the state debt, November i, 1887, was 
^449,267, drawing interest at 8 per cent. There was in the 
sinking fund 3128,761. 

Nevada. 

The statistics given are for the year ending December 31, 
1887. From the property tax there was received into the 
treasury, $236,855 ; from tax on proceeds of mines, ^13,723 ; 
from escheats, $51; from possessory claims, $60; from 
court fines, S3254; from gaming licenses, $7546; and 
from a poll tax of $2 per poll, $16,667 \ total receipts from 
counties, $278,572. There was received into the several 
funds beside the above, $188,683, principally from land 
sales, the other receipts being on account of fees, licenses, 
interest on bonds, etc. 

The actual disbursements were (subtracting transfers from 
fund to fund) $392,433. 

The assessed valuation of real estate was $15,649,537 ; of 
personal property, $10,790,670; net proceeds of mines, 
$1,557,133; total assessment, $27,997,340. The value of 
railroad property was $9,212,451. The state rate vras 90 
cents on the $100. 

The cost of collection of taxes is about 9 per cent. This 
large rate is due to the small amount of collections. The 
cost of collecting revenues from taxes tends to diminish 
rapidly as population and wealth increases. 

The state bonded debt, December 31, 1887, was $541,000 ; 
but of this amount $380,000 is an irredeemable debt, held by 
the school fund, Vv'hile the remainder is also held by state 
funds. There is cash enough in the treasury to pay all 
indebtedness, exclusive of the $380,000. 

The state holds in trust, for the state educational funds, 
about $1,140,000 in bonds and cash. Some of the bonds are 
state bonds, the remainder United States four per cent, bonds. 



I 



REVENUES AND EXPENDITURES. 435 

New Hampshire. 

The state received into its treasury during the year end- 
ing j\Iay 31, i886j $500,197, as follows : — 

State tax $400,000 

Railroad tax 87,090 

Insurance tax . 4)832 

Interest 1,318 

License fees (pedlers) 840 

License fees (fertilizers) 550 

Charter fees 2,025 

Telegraph tax 417 

Telephone tax . 2,454 

Escheated estates 283 

Miscellaneous 388 

Beside the above an additional railroad tax of $99,890, 
a savings bank tax of $395,791, and a non-resident savings 
bank tax of $T^Z.t?>^-^, were divided among the several cities 
and towns of the state. 

The ordinary expenses were $264,442 ; the extraordinary, 
$31,784 ; and expenditure on account of interest, $178,764 ; 
a total of $474,990. The ordinary expenses include salaries 
and expenses whose payment is provided for by general 
laws ; extraordinary, those which are authorized by special 
acts of the legislature. 

For 1886 the amount of taxable property assessed was : 
real, $130,298,843; personal, $87,823,711; railroad, $13,- 
536,711 ; total, $231,659,265 ; the rate of taxation for state 
purposes, 19 cents on the $100. The average rate for all 
purposes was $1.52 on each $100. 

The funded debt of the state, June i, 1886, was $2,926,- 
600 bearing interest at 6 per cent. 



436 STATISTICAL INFORMATION. 

New yersey. 

In the comptroller's report for the year, ending October 
31, 1886, the receipts are grouped according to the purpose 
for which they are intended. The following were the princi- 
pal revenues of the state fund : — 

From railroad and canal corporations ^778,290 

miscellaneous corporations 147,415 

state prison receipts 62,073 

dividends 28,870 

fees . 31,408 

fines, etc 2,777 

commissions 490 

temporary loans • 250,000 

The total amount received into this fund was $1,303,000. 
The disbursements from the same were $1,258,862 : on 
account of public debt, $90,000 ; charitable and reforma- 
tory institutions, $252,311; courts and crimes, $339,219; 
state government, $235,016 ; military purposes, $109,042 ; 
publication, $84,851; educational institutions, $38,294; 
scientific and sanitary purposes, $68,049 ; and miscella- 
neous purposes, $42,080. 

There was levied a state school tax on property amount- 
ing to $1,465,268. Ninety per cent, of the amount paid 
by each county was repaid to the county for school purposes, 
and the remaining 10 per cent, was apportioned among the 
counties by the board of education. 

There is, also, levied a local tax on railroads and corpora- 
tions, which is distributed among the several cities and 
towns. 

The school fund and the Agricultural College fund have, 
invested in bonds, etc., respectively, $3,871,254 and Si 16.000, 

It wdll be noticed that all taxes were raised from railroads 



REVENUES AND EXPENDITURES. 437 

and other corporations, except the tax for school purposes, 
the rate of which for 1886 was 2.59 mills on the ;^i. 
There is a poll and property tax for county and school pur- 
poses. The total valuation of property assessed was $573,- 

256,304. 

The state debt is represented by war bonds amounting to 
$1,496,300, bearing 6 per cent, interest. A certain por- 
tion of the debt is payable each year, the amount being 
$100,000 until 189 1, after which the sum is variable. 

New York. 

The receipts into the various funds of the state for the 
year ending September 30,1887, were $10,521,194, of which 
sum $9,526,543 was for the benefit of the general fund, the 
chief sources being the following : — 

State tax $5,801,401 

Taxes on corporations 1,239,864 

Tax on organization of corporations 201,664 

Tax on collateral inheritances 561,716 

Auction duty 18,041 

Salt duty 58,992 

Fees (public officers) 3i»39i 

Fees (notaries) 29,998 

Fines 3jI44 

Interest on deposits 35. 310 

Public lands 51 .382 

Non-resident taxes 129,268 

Insurance department (fees) 132,268 

Electric subway commissions 13,289 

The total payments on accounts of these funds were 
$9,529,886, on account of the general fund, $8,599,886. 
Of this sum, $2,148,928, the proceeds of a tax of 6.8 cents 
on the $100, was transferred to the canal fund. It is not pos- 
sible to enumerate even the principal objects of expenditure. 



438 STATISTICAL INFORMATION. 

The above sums given as totals of receipts and expendi- 
tures are exclusive of receipts and expenditures for canals 
and free schools. A part of the receipts into the canal fund, 
however, is included in the account of the general fund as 
has been noted, and so receives double mention, and is 
counted in twice. This increases the seeming revenue over 
$2,000,000. The necessity for such a system of book- 
keeping is not apparent, and it is suggested that a better 
method might be invented or found. Adding in the receipts 
into the two funds named above, the aggregates become — 
including transfers: receipts, 317,829,467; expenditures, 
$16,771,449. 

The resources of the several productive funds are given 
as follows : — 

Common school fund . . » ^3>930ji57 

Literature fund 284,201 

United States deposit fund 4,014,522 

College land scrip fund 473,403 

ISIilitary record fund 39,121 

The assessed valuation of real estate for 1887 was 
$3,114,029,214; of personal estate, $346,099,669; total, 
$3,461,139,614. The rate of taxation for schools was 
I.I mills on the dollar; for general purposes, 1.6 mills. 

The town taxes were $13,975,005 ; county taxes, $34,- 
281,141 ; state and school, $9,075,046 ; the aggregate taxa- 
tion, $57,331,191. 

The total funded debt, September 30, 1887, was $7,444,- 
310 bearing 6 per cent, interest, nearly all being canal 
debt. The amount in the sinking fund was $4,061,189. 
The net debt is given as $3,505,816, and the am.ount in the 
treasury on the same date was $3,714,907. This leaves a 
net surplus of $209,091. The state is therefore practically 
out of debt, and has in addition the above funds, amounting 
to over S8, 000, 000. 



1 



REVENUES AND EXPENDITURES. 439 

North Carolina. 

This state has two funds, the " public fund " and the 
"educational fund." Into the former there was received 
for the year ending November 30, 1887, $847,864. This 
sum was derived chiefly from the following sources : — 

Public taxes ^505,612 

Taxes to pay interest 26,386 

Licenses (drummers') 35j275 

Licenses (fertilizer) 36,500 

Fees 6,535 

Tax on telegraph and telephone companies . . . 1,621 

" express companies 385 

" bank stock 8,922 

" insurance companies 19,026 

Dividends of North Carolina R.R 154,674 

Tax on gross receipts of same 4,419 

Railroad property and franchise tax 16,391 

The detailed list of expenditures covers one hundred and 
thirty pages, and it has not been found possible to arrange 
and classify them ; the total disbursement on account of this 
fund, however, were $Z^(i,TyTy/\. 

There was received into the educational fund $6920, 
from entries on vacant land, from an incorporation tax, on 
railroads, and from interest on state bonds. 

There were levied in the counties the following^taxes for 
school purposes •. on licensed retailers of liquor ; on white 
and colored polls ; on bank stock, and on dogs ; 1 2\ cents 
on $100 of real and personal property; amounting in all to 
^^605,203. 

The total valuation of property for 1886 was $202,444,- 
733; of real, $126,883,382 ; of personal, $75,561,351. The 
valuation of railroad property, franchise, etc., was $7,075,- 
252 ; this sum, however, is included in the above total. 
The rale of the state tax was 3I mills on the $1. 



440 STATISTICAL INFORMATION. 

Ohio. 

There was received into the state treasury, on account of 
general revenue for the year ending November 15, 1886, the 
sum of ^2,755,734, principally as follows : — 

From taxes, etc. (county treasurers) .... ^2,323,254 

public works, rents, tolls, etc 127,352 

fees (insurance companies) 38,560 

fees (other sources) 16,993 

suspended war claims 12,590 

notes and interest 19,614 

penitentiary (convict labor) 215,257 

There was received from sale of bonds ;?50o,887, which 
is not included in the above aggregate. 

The disbursements for the same period, on account of 
general revenue, were ^3,081,965 ; and were chiefly on 
account of the expenses of civil government, educational 
and charitable institutions, and the penitentiary. 

The sinking fund is supplied by a general tax and sale of 
lands, the former amounting, in t886, to $829,962. 

The common school fund also receives a portion of the 
general tax, and pedlers' licenses, the former amounting in 
1886 to $1,660,742, the latter to $1779. 

It will be seen that the general taxes are the principal 
source of revenue, $4,813,958, out of a total of $5,775,904, 
being received from them in 1886. 

The assessed valuation for 1886 was: of realty, $1,173,- 
106,705; of personalty, $515,569,463; total, $1,688,676,- 
168. The rate of the state tax was 2.9 mills on the $1. 

Beside the state tax there were county taxes laid amount- 
ing to $8,372,519; city taxes, $7,606,025; school taxes, 
$7,682,120 ; to\\Tiship taxes, $1,099,963 ; total taxes, includ- 
ing certain miscellaneous taxes in addition to the above, laid 
for all purposes, $33,585,306. 



REVENUES AND EXPENDITURES. 441 

The following items have been taken from an ab- 
stract of personal property as returned by the assessors : 
horses, $48,371,124 ; cattle, $29,490,399 ; mules, $1,562,1 74 ; 
sheep, $8,888,430 ; hogs, $5,137,982 ; carriages, $8,231,763 ; 
watches, $2,359,368 ; pianos and organs, $5,124,032 ; mer- 
chants' stock, $44,661,562 ; bankers, brokers, etc., $848,465 ; 
manufacturers' stock, $16,023,899; moneys, $34,346,612; 
credits after deducting debts, $108,019,000; property of 
banks and other corporations, $105,018,572 ; other person- 
alty, $43,216,488. The number of dogs, assessed at one 
dollar per head, was 206,748. 

The total funded debt of the state, November 15, 1886, 
was $3,845,229, $2,025,139 bearing 6 per cent, interest, the 
remainder 4, 3^, and 3 per cent. In addition to the above 
there is an irreducible state debt, consisting of trust funds 
of over 4J millions. The amount in the state sinking fund 
was $96,237. Debts of cities of the first and second classes 
are given as about 42^- millions, and of counties 6 J millions. 

Oregon. 

The receipts into the treasury of this state are distributed 
among so many funds, that the revenues from a given source 
cannot without great difficulty be collected. From an exam- 
ination of the treasurer's report, the principal items in the 
detailed list of receipts are found to be taxes, income from 
penitentiaries, sale of land, and interest. The expenditures 
are also unclassified except by funds. 

The total receipts for the year ending January 9, 1887, 
were $1,870,264; the total disbursements, $1,487,780. 

For 1885, the taxable property, real and personal, as 
assessed, was $77,188,694; the rate of the state tax, 31 
cents on the $100. 



442 STATISTICAL INFORMATION. 

The notes, etc., held by common school, agricultural col- 
lege, escheat, and university funds, amounted Xo $(i()2,\2^. 
The amount of the state debt is ^110,000. 

Pennsylvania. 

This state has no general tax on lands. The following 
are the chief sources of revenue, and from them were 
derived, during the year ending November 30, 1887, sums 
as follows : — 

Tax on corporation stock, etc ^1,702,057 

" gross receipts (corporation) 776,388 

" stock of banks, safe deposit and trust com- 
panies 431,628 

" personal property 864,355 

" writs, wills, deeds, etc 117,496 

" collateral inheritances 763,871 

" foreign insurance companies 377.571 

" net earnings or income 81,597 

Licenses (tavern) 565,164 

" (eating houses) 90,989 

" (wholesale liquor) 39>82i 

" (brewers and bottlers) 24,587 

" (retailers) 405>io5 

" (other than above) 76,833 

Bonus on charters 148,625 

Notaries' commissions I5'575 

Commutation tonnage tax 460,000 

United States government 172,000 

Allegheny Valley Railroad 212,500 

Fees 61,952 

The total receipts into the treasury were $7,646,147. 

The payments from the treasury were chiefly as follows : 
expenses of government, $1,938,619; loans redeemed, 
$1,418,511; interest on loans, $720,277; penitentiaries, 
$138,974; charitable institutions, $780,219; reformatories, 



REVENUES AND EXPENDITURES. 443 

^230,040; and common schools, $1,171,812. The total 
expenditures were $7,366,763. 

The valuation of personal property in the several counties 
and taxable for state purposes, in 1887, was $401,079,562, 
the tax rate thereon being 3 mills on the $1. This is exclu- 
sive of property of corporations. 

The funded debt of the state, December i, 1887, was 
$15,692,600; the unfunded and non-interest-bearing debt, 
$147,871; a total debt of $15,840,471. Of the funded 
debt, $500,000 drew interest at 6 per cent., $5,233,500 at 
5 per cent., $7,844,200 at 4 per cent., and $2,114,900 at 
3^ per cent. 

The state has a considerable sum in stocks of incorporated 
companies and in the sinking fund ; the exact amount for 
1887 has not been found; for 1885 the amounts in these 
together amounted to $8,600,000. 

Rhode Island. 
In the state treasurer's report for the year ending Decem- 
ber 31, 1887, the receipts are given as $737,751, the ex- 
penditures for the same period, $852,704. The principal 
receipts were the following : -— 

State tax $394,237 

Savings institutions 145,135 

Insurance companies 46,027 

Foreign insurance agents 33j049 

Courts 28,755 

Jailers 4,887 

Pedlers' licenses • • • 2,855 

Auctioneers 2,154 

Charters 5,750 

State institutions in Cranston 39,741 

Dividends on school fund 12,909 

Tax on telephone companies 1,559 

" telegraph companies 597 

" express companies '^,'^ZZ 



444 STATISTICAL INFORMATION. 

The principal expenditures were : en account of special 
appropriations, $59,820 ; for interest on state debt, $80,760 ; 
to commissioners of sinking fund, $100,000; for public 
schools, $119,989 ; for support of state institutions at Cran- 
ston, $162,015; for salaries, $86,349; for expenses of the 
general assembly, $21,560; and for the courts, $58,931. 

The amount of taxable property was as assessed for the 
state tax, 1886 : real, $243,658,190; personal, $84,872,369; 
total, $328,530,559. The rate of the state tax was 12 cents 
on each $100. 

The funded debt of the state, January i, 1888, was 
$1,341,000 bearing 6 per cent, interest. There was at the 
same date in the sinking fund $701,504. 

South Carolina. 

The total net revenue of the state for the fiscal year end- 
ing October 31, 1887: was $977,363, nearly all of which sum 
was received from taxes and on account of phosphate royal- 
ties, the former amounting to $707,929 (net), and the latter 
to $208,786. Other items given in the list of receipts are : 
insurance fees, $4075 ; returns from the agricultural depart- 
ment (probably fertilizer fees) amounting to $24,178, and 
from the sinking fund commission, $13,853. 

The expenditures for the year were $969,787 : $60,845 
on old accounts; $253,710 for current expenses ; $355,262 
for payment of interest on public debt; $128,781 for penal 
and charitable institutions ; and for miscellaneous purposes, 

$171,198- 

The assessed value of property for the year 1887 was: 
real estate, $82,943,380; personal property, $41,867,145; 
railroad property, $16,263,822 ; total, $141,074,347. The 
rate of the state tax was \\ mills on the dollar. The county 



REVENUES AND EXPENDITURES. 445 

taxes laid fcr the same year were $668,788 ; the school taxes, 
^300,064. 

The following items appear in the aggregate list of per- 
sonal property for the year: horses, ^3,321,101 ; cattle, 
^1,808,844; mules and asses, $3,864,212 ; sheep and goats, 
$88,576; hogs, $368,365; watches and plate, $506,127; 
piano-fortes, melodeons, or organs, $407,315 ; pleasure car- 
riages, $1,969,593 ; dogs, $336,452 ; property of merchants, 
$6,578,459; of manufacturers, $1,084,587; manufactured 
articles on hand, engines, etc., $4,440,100 ; moneys, $2,157,- 
806; all credits, $3,703,793; stocks of any company ex- 
cept national banks, $1,559,606; bonds not exempt, 
$1,738,625 ; all other property, $7,385,158. 

The total funded debt, October 31, 1887, was $6,122,928 ; 
the unfunded, $276,814 ; a total debt of $6,399,743. County 
and township debts were $2,253,688 ; city and town debts, 
$5,276,083. 

The sinking fund held sums to the amount of $20,000. 

Tennessee. 

From December 20, 1884, to December 19, 1886, the 
receipts of the state were $2,581,553, and the total disburse- 
ments, $3,291,301. 

The receipts were principally from the following sources : — • 

Trustees {i.e. general tax) $1,231,437 

County clerks (privilege taxes) 664,022 

Other clerks (fees, fines, etc.) 66,700 

Insurance companies 69,012 

Banks 13,126 

Railroads 172,945 

Express companies 9,080 

Telegraph companies 754 

Insurance fees ■ 14,328 

Escheats 55877 



446 STATISTICAL INFORMATION. 

Redemption of lands ^48,691 

Turnpike company 26,585 

Certain railroads 12,860 

The principal items of disbursement were : interest on 
state debt, etc., $1,327,953; judicial salaries, $190,044; 
executive salaries, $22,828; legislative expenses, $84,000; 
and hospitals, etc., $388,000, 

The assessed valuation of property for 1886 was: lands, 
$140,994,711; town lots, $59,123,554; personal property, 
$24,790,914; railroad property, $31,547,582; total, $256,- 
456,761. The rate of taxation was 30 cents on every $too. 

The debt of the state funded under an act of March, 
1883, was, December 20, 1886, $11,412,900 ; 6 per cents. 
$725,200; 5 per cents., $357,100; 3 per cents., $10,330,- 
600. The unfunded debt amounted to $7,548,995. 

Texas. 

As there are in this state no less than thirty different 
funds or accounts, the collection of revenues from one source 
and another into a single sum is a difficult task, but as to 
most of the minor funds there accrued little else than pro- 
ceeds from land sales and interest, attention will be given 
to the two more important funds, the " state revenue " and 
" available school " funds. 

Into the former fund there was received for the 5^ear end- 
ing August 31, 1887, $2,353,025, chiefly from the following 
sources : — 

General taxes $2,126,060 

Special occupation tax 77j224 

General land office (fees, etc.) 60,656 

Fees (office, indigent, etc.) 48,564 

Railroad companies \\,'^\2 



REVENUES AND EXPENDITURES. 447 

Into the available school fund was received ^2,109,695 : 
from taxes, ^1,069,738; from state land board, ^125,000; 
lease of school lands, ^24,774; from interest, ^817,511. 

The disbursements of the first fund were on account of 
current expenses, of the latter for school purposes. 

The total receipts for the year on account of all funds 
were ^5,499,043 ; the total disbursements, ^4,972,386. 

The classes and value of property returned for taxation, 
for 1887, were as follows: land, ^282,599,397; town lots, 
^105,226,386 ; railroads, $48,274,237 ; telegraph lines, $576,- 
362 ; land certificates, $206,830 ; steamboats, etc., $348,040 ; 
carriages, wagons, etc., $6,697,934; manufacturers' tools, 
etc., $7,251,608 ; materials and manufactured articles, $818,- 
403; horses and mules, $33,166,338 ; cattle, $51,008,550; 
jacks and jennets, $415,471; sheep, $5,016,674; goats, 
$493,605 ; hogs, $1,141,655 ; goods, wares, and merchan- 
dise, $28,393,104; money on hand, $11,827,284; miscella- 
neous, $33,376,809; total (adding approximate value of 
lands in unorganized counties owned by non-residents) 
$650,412,401. 

The state ad valorem tax was 25 cents on the $100; the 
school tax, \2\ cents; the state revenue poll tax, 50 cents 
per capita; and the school poll, $1. The taxes levied for 
1887 were as follows : — 

State ad valorem tax (25 cents on the ^100) . . ^1,626,103 

School tax (12!^ cents on the |ioo) 813,119 

State revenue poll (50 cents per capita) . . . 173,961 

School poll ($1 per capita) 348,006 

$2,961,189 

It will be readily understood that taxes levied and taxes 
collected in any one year differ by very considerable sums. 
There was collected in the several counties an occupation 



448 STATISTICAL INFORMATION. 

tax, no fewer than forty occupations being subject thereto. In 
the above account of receipts into the general revenue, men- 
tion is made of a " special occupation tax," which is made 
payable to the comptroller of the state. The general occu- 
pation taxes, however, do not seem to be paid into the 
state treasury, as no account of them is found in the table of 
receipts. 

These occupation taxes collected in counties amounted, 
in 1887, to $648,555, the greater part of which was collected 
from hquor-dealers, viz. : — 

From retail liquor-dealers ^395,100 

" sale by quart 62,400 

" wholesale liquor-dealers 10,200 

" beer dealers 45,950 

" all other occupations 134,905 

These occupation taxes are evidently the same thing as 
the hcense taxes of other Southern states, a payment for the 
privilege of gaining a livelihood in the occupations subject 
thereto. Although a tax is required for engaging in many 
occupations, the revenues from all save liquor-dealers are 
small. 

The state had, August 31, 1887, a bonded indebtedness 
amounting to ^4,237,730; but of these bonds the greater 
part was held by funds of the state, the amount in the hands 
of individuals being but $1,245,830. The newspapers report 
that the governor of Texas has called a special session of 
the legislature to determine what shall be done with a sur- 
plus of $3,000,000 which has accumulated. 

Ver7nont. 
During the year ending July 31, 1886, there was received 
into the state treasury, $518,461, and paid out, $380,646. 
The principal receipts were as follows : — 



REVENUES AND EXPENDITURES. 449 

State tax $171,011 

Corporation tax 200,686 

Fees (probate judges) 12,321 

County clerks 29,565 

Licenses, foreign insurance, and fertilizer companies 3,844 

The expenditure on account of interest was ^18,963 ; in 
payment of auditor's orders, i.e. for current expenses, 
$311,632 ; and in payment of loans, ^36,000. 

The amount of taxable property as assessed, 1886, was : 
real, $107,264,665 ; personal, $49,927,597 ; total, $187,192,- 
262. The rate of the state tax on property was 10 cents on 
each $ioo. 

The state holds in trust several funds, educational and 
otherwise, amounting to over $500,000. 

The state has practically no debt. The total bonded 
debt, represented by 6 per cent, bonds held in the Agricul- 
tural College fund, is more than covered by resources in the 
treasury. 

Virgijita. 

The principal receipts into the treasury of this state were, 
for the year ending September 30, 1887 : — 

Real estate tax $755,921 

Personal property tax 238,142 

Capitation tax 160,542 

Bank tax 29,961 

Railroad tax 308,428 

Licenses (liquor) 244,413 

Licenses (other) 374,608 

Income tax 20,755 

Insurance company tax and license 31)859 

Telegraph and telephone tax and license .... 4)356 

Oyster tax I3>329 

Clerks (court fees) 77,048 

Fines 14,55° 



450 STATISTICAL INFORMATION. 

The total receipts were ^2,569,339; the disbursements, 
$2,626,713. Of the latter, $743,483 was paid out on ac- 
count of pubHc schools ; nearly $400,000 for lunatic asy- 
lums, etc. ; nearly $500,000 as interest; $107,732 to officers 
of the government; and $237,978 for criminal charges. 

The assessed valuation of real estate for 1887 was 
$257,468,760; of personal property, $81,873,963; of rail- 
road property, $35,700,515 ; total, $375,043,238. The rate 
of the state tax was 40 cents on each $100 of valuation. 

The amount of the state debt, October i, 1887, funded, 
under act of February 14, 1882, was $29,095,967, $10,000,- 
000 drawing 3 per cent, interest, the remainder 6 per cent. 

The state has a sinking fund, but the exact amount of it 
has not been found. 

West Vii'-ginia. 

The state has four funds, the total receipts into which for 
the fiscal year ending September 30, 1886, were $1,167,514. 
There was received into the state fund, principally from 
the following sources, $669,668 : — 

State tax ^342,858 

License tax 75»78i 

License tax (on corporations) 6,800 

Railroad tax (state) 25,035 

Railroad tax (county and district) 129,901 

Railroad tax (municipalities) 8,830 

Loan 35^009 

C. & O. R.R 25,795 

The expenditures from this fund were chiefly for current 
expenses, and amounted to $672,110. 

There was received into the general school fund, from 
general taxes, $330,789 ; from fines, $11,449 \ f^"om railroad 
tax, $12,517 ; from the C. & O. R.R., $11,707 ; and consid- 



REVENUES AND EXPENDITURES. 451 

erable sums from interest and dividends on stocks. And 
there was received into the pubhc building fund from gen- 
eral tax, ^61,939 ; from the railroad tax, ^^6074. The total 
amount received from the general tax thus was $735,586, or 
about two-thirds of the total receipts, and from the railroad 
tax $183,000, or about one-sixth. The amount of this tax 
collected for counties and municipalities was distributed to 
them. 

The total assessed value of property for 1886 was : real, 
^116,746,529; personal, $42,768,223; railroad property, 
^14,488,758; total, $174,003,510. A capitation tax of $1 
was also laid for school purposes. The rate for all purposes 
was 35 cents on each $100, — 20 cents for state purposes, 
10 cents for school purposes, and 5 cents for pubhc building 
purposes. 

The school fund had invested in bonds, October i, 1886, 
$570,473, $137,511 of which was represented by state 
bonds. The constitution provides that the school fund must 
be maintained, and certain revenues are set apart for its 
increase. The income from the fund may be expended, but 
any* unexpended balance must be added to the capital of 
the fund. 

The state has no debt, the constitution forbidding the 
creation of any debt, except in an emergency like invasion. 
Virginia claims that West Virginia should share the ante hel- 
ium debt; but no adjustment has yet been made. 

Wisconsin. 

Wisconsin has, like several other states, numerous funds ; 
but as most of these are fed by land sales and interest, it 
will be necessary to examine only the general fund and, per- 
haps, the school fund. 

The receipts of the general fund for the year ending Sep- 



452 STATISTICAL INFORMATION. 

tember 30, 1886, were $1,770,265. Of this sum there was re- 
ceived from counties, principally as interest, $893,304 ; from 
corporations, as licenses, $831,459 ] and from sundry sources, 
$45,502. There was no general tax for state purposes ; but 
a tax of about i^- mills on the dollar was laid for schools 
and charitable institutions. Of the total sum received as 
licenses from corporations, $747,870 was paid by railroads. 

The expenditures from this fund were $1,722,464, as fol- 
lows : for salaries, $881,390; for legislative expenses (the 
legislature not sitting this year), $2038; for charitable and 
penal institutions, $309,099 ; for clerk hire, $42,285 ; for 
labor about capitol, $37,700 ; for sundry purposes, $489,952. 

Beside income from sale of lands, and interest, the school 
fund received certain fines and forfeitures. 

The valuation of property, as assessed for 1886, was : 
real, $398,372,090; personal, $104,713,164; total, $503,- 
085,254. 

The school fund had invested, September 30, 1886, in 
bonds, etc., sums to the amount of $2,978,118 ; the univer- 
sity fund, $190,998 ; the agricultural college fund, $258,597 ; 
and the Normal School fund, $1,398,740. 

The state has practically no debt, although it has nomi- 
nally a funded debt of $2,252,000. There was outstanding, 
September 30, 1886, but $1000, the remainder being con- 
verted into certificates of indebtedness, and held by the 
several funds above mentioned. 



3. TABLE SHOWING RECEIPTS AND EXPENDITURES OF STATES. 

In the appended table are grouped the principal receipts 
common to the budgets of several states, and there are also 
given the total receipts and expenditures of the various 
states. It will not be necessary to add many explanatory 



Arli 

Cal 

Col 

Coi, 

Dep 

Flc 

Ge 

Illi 

Infl 

loAJ 

Ka 

Kq 

Ld 

m/ 

Ma 

Mi 

Mi 

Mi 
Mi 

N( 

N 

o: 

O: 

p. 

R] 

s. 

T( 
T( 

V. 

V 



OTHER 
SOURCES. 



$116,706 

1,093,000 

344,096 

198,900 

32,206 

6,533 

2,909,414 

371,834 

1,927,645 

379,072 

1,433,285 

561,757 

595,560 

33,900 

873,785 
1,916,189 

377,956 
501,197 
262,378 
132,063 

206,187 
4,870 
952,946 
6,118,781 
218,603 
906,393 

1,348,690 
114,294 
241,181 

175,494 

2,105,091 

101,034 

458,323 
266,347 

22,755 



TOTAL 
RECEIPTS. 



$888,724 
1,445,120 
6,476,230 

918,697! 
1,813,702 
121,1902 

383,843' 
4,220,130 
3,416,8281 
4,738,198 
1,663,991 1 
2,566,624 
3,038,6382 
1,907,152 
1,161,980 

2,440,363 

8,748,652 

3,002,423 2 

2,476,530 

1,069,568 

3,425,562 

1,661,922! 

467,255 
500,197 

3,375,327 
17,829,467 
847,8642 

5,775,904 
1,870,264 
7,646,147 

737,751 

977,363 
1,290,776! 
5,499,043 

518,461 
2,569,338 
1,167,514 

885,1321 



TOTAL 
EXPENDITURE. 



$818,366 

515,605 

5,787,612 
707,9761 

3,249,597 
120,0282 

534,466 2 

4,453,393 

3,631,552^ 

4,774,226 

1,755,750^ 
2,727,701 

3,058,578=^ 

1,349,964 

1,168,544 

2,374,916 

9,3i7'6o9 

2,830,8542 

2,759,815 

1,029,638 

3,337,131 
1,411,154! 

392,423 

474,990 

3,341,404 

[6,771,449 

886,3342 

5,573,721 

1,487,780 

7,366,763 

852,704 

969,787 
1,645,6511 

4,972,386 
380,646 

2,626,713 
979,694 
861,2321 



[Ipts and expenditures for one year. 
' 5 Privilege taxes. 



TABLE 

SHOWING PRINCIPAL RECEIPTS, AND TOTAL RECEIPTS AND EXPENDITURES OF THE STATES. 





Hi: 


GENERAL 


RAILKOAD 
TAX. 


GENERAL 
COT:i'ORATION 


GENERAL 


LIQUOR 




INSURANCE 


EEES 


INNER.. 










ENDING 






TAX. 




TAX. 












RECEIPTS. 


EXPENmXURR. 


Alabama . . 
Arkansas . . 
California. . 






Sept. 30, '86 
Oct. I, 'S4 
June 30, ;S6 


^655,102 
4,519.117 


gl2,500 
851,413 






S99.47I 




■$12,700 


$4,377 


$568 




$116,706 
1,093,000 


$888,724 
1,445,120 
6,476,230 


$818,366 

515,605 

5,787,612 


Colorado . . 






Nov. 30, '86 


534.258 














18,623 


21,720 




344,096 


918,6971 


707,9761 


Connecticut . 






June 30, ;86 


539.944 


626,199 










200,590 


248,069 






198,900 


1,813,702 


3,249,597 


Delaware . . 






Dec. 31, '86 


None 


41,528 






45.423 








1,120 


'JS9I3 


32,206 


121,1902 




Florida. . . 






Dec. 31, '86 


246,890 








130,420 












6,533 


383,843^ 


534',4662 


Georgia . . 






Sept. 30, '86 


871,130 


95,521 






176,417 


;567,'S8I 




2i:3'62 


78,405 




2,909,414 


4,220,130 


4,453,393 


Illinois. . . 






Sept. 30, '86 


2,969,5511 
















75,443' 




371.834 


3,416,8281 


3,631,5521 


Indiana . . 






Oct. 3.,;87 


2,709,635 














85.'532^ 






1,927,645 


4,738,198 


4,774,226 


Iowa. . . . 






July I, '87 


1,179.942' 








1,0981 






95.802 1 


'10771 




379,072 


1,663,9911 


1,755,750! 


Kansas. . . 






June 30, '86 


1.082,476 














50.863 






1,433,285 


2,566,624 


2,727,701 


Kentucky. . 






June 30, '87 


1,845,461 


148,082 






276,704 




100,887 


105,747 






561,757 


3,038,638 2 


3,058,578'' 


Louisiana. . 
Maine . . . 






Dec. 31, '83 
Dec. 31, '87 


1, 108,755 
753,077 


89,797 






273,918 
11,482 




256,430 


17.294 


i8,9'i9 




595,560 
33,900 


1,907,152 
1,161,980 


1,349,964 
1,168,544 


Maryland. . 






Sept. 30, '87 


864,763 


52,433 


$70,586 


521,310 








11,949 


45.597 


873,785 


2,440,363 


2,374,916 


Massaciiusetts 






Dec. 31, -86 


1,499,805 




2,227,579 


45,729 


303,798 


2,398,267 


326.336 


30,949 




1,916,189 


8,748,652 


9.317,609 


Micliigan . . 






Sept. 30, '86 


1,669,686 












124,756 


17.313 




377,956 


3,002,4232 


2,830,8542 


Minnesota . 






.T«iy 31, '87 


1,201,223 


675,745 










98.365 






501,197 


2,476,530 


2.759,815 


Mississippi . 






Dec. 31, '87 


414,775 


140,316 






142,649° 


109,450 










262,378 


1,069,568 


1,029,638 


Missouri . . 






Dec. 31, '86 


3,035.820 


78,370 






151,477'^ 






22,619 


5,213 




132,063 


3,425,562 


3.337,131 


Nebraska . . 






Dec. I, '86 












... 












1,661,9221 


1,411,154! 


Nevada . . 






Dec. 31, '87 


253.522 








7.546 












2i6,'i87 


467,255 


392,423 


New Hampshir 


e 




May 31, '86 


400,000 


87,080 






1,390 






4,832 


2,025 




4,870 


500,197 


474,990 


New Jersey . 
New York . 






Oct. 31, '86 


1,465,268 


778,290 


147,415 
1,441,528 










31,408 




952,946 


3.375,327 


3,341,404 






Sept. 30, '87 


9,513,785 










132,268 


61,389 


56i'.7i6 


6,118,781 


17,829,467 


16,771,449 


Nortli Carolina 






Nov. 30, '87 


505,612 


16,391 




71,775 




'8,922 


19,026 


6,535 




218,603 


847,8642 


886,3342 


Ohio .... 






Nov. 15, '86 


4.813.958 














38,560 


16,993 




906,393 


5,775,904 


5,573,721 


Oregon. . . 






Jan. 9, '87 
























1,870,264 


1,487,780 


Pennsylvania 






Nov. 30, '87 


864.355 " 




2.478, 


H5 


167,822 


1,034,677 


431.628 


377,571 


179,088 


763,871 


1,348,690 


7,646,147 


7.366,763 


Rliode Island 






Dec. 31, '87 


394.237 








5,009 




145.135 


79,076 






114,294 


737,751 


852,704 


South Carolina 






Oct. I, '87 


707,929 
















28,253 




241,181 


977.363 


969,787 


Tennessee . 
Texas . . . 






Dec. 20, '86 
Aug. 31, '87 


615,218 
3.195,798 


86,473 
11,712 






332,011' 
77,2246 




'6.563 


41,670 


33,350 
109,220 




175.494 
2,105,091 


1,290,7761 
5,499.043 


1,645,6511 


Vermoni . . 






July 3','--i<^ 


171,011 




200, 


j86 


3,844 








41,886 




101,034 


518,461 


380,646 


Virginia . . 






Sept. 30, -87 


1,1 S3. 605 


308,428 






374,608 


244,413 


29,961 








45S.323 


2,569,338 


2,626.713 


West Virginia 






Sept. 20, '86 735,586 


183,000 






82,581 












266,347 


1,167,514 


979,694 


Wisconsin . 


Sept. 30, '86 1 446,652 "> 




415.725 














22,755 


885,132! 


861,232! 



) determine approximately t 



REVENUES AND EXPENDITURES. 453 

notes, as the reader will find detailed information regarding 
the finances of the states in the preceding pages. 

The table must be more or less unsatisfactory in its 
nature, for the reason that, as above stated, there is so 
little uniformity among the states in the manner of keeping 
their accounts. The "general tax," for instance, is not 
the same in all states. In one state it is a mere tax on 
property, excluding corporations ; in another, the property 
of corporations is included in the general assessment ; while 
in a third a poll tax is inseparably connected with the prop- 
erty tax. The tax on railroads is sometimes included under 
the head of the general corporation tax, sometimes given 
separately. The liquor license tax, too, is sometimes in- 
cluded in the general Hcense tax and cannot be separated. 
But the table has, perhaps, in spite of inexactness, the merit 
of showing in a more graphic and condensed form than 
can otherwise be given, the chief sources of state revenues. 

The total receipts of all the states as given below are 
$109,543,870 ; the total expenditures, $107,299,152 ; of the 
territories (exclusive of x\laska), the receipts were $1,608,712, 
the expenditures $1,317,020 ; making thus the total receipts 
of states and territories, $111,152,582; the total expendi- 
tures, $108,616,172. It must, however, be remembered, 
that these figures are merely approximate. In some cases 
it has been necessar}^ to divide by two the receipts and ex- 
penditures, which were found for two years. In some cases 
funds are necessarily excluded which are in other cases 
included. 



454 



STATISTICAL INFORMATION. 



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456 



ST A TISTICAL INFORM A TION. 





VALUE OF 


VALUE OF 


TOTAL VALUE 






YEAR. 


REALTY. 


PERSONALTY. 


OF TAXABLE 
PROPERTY. 


STATE TAX. 


TOTAL. 


1826 


$15,946,840 


$11,035,820 


$57,982,640 


$105,816 00 


$392,783 00 


1827 


47,206,386 


12,375,336 


59,591,722 


188,830 00 


472,094 00 


1828 


50,116,513 


12,168,841 


62,285,054 


187,906 00 


498,481 00 


1829 


49>5ii>733 


16,788,170 


66,299,903 


174,412 00 


441,191 00 


1830 


50,086,250 


14,589,335 


64,675,578 


232,472 00 


598,595 00 


,1831 


50,627,110 


15,793,666 


66,420,776 


240,991 00 


615,651 GO 


'1832 


55,013,412 


19,229,620 


74,243,032 


264,954 00 


685,909 00 


1833 


58,280,851 


19,738,675 


78,019,526 


247,079 00 


730,010 00 


1834 


57.399,577 


23,500,073 


81,100,660 


172,434 00 


703,104 00 


1B35 


75,760,797 


21,188,408 


96,949,205 


147,854 00 


805,050 00 


1836 


72,223,906 


27,029,444 


99,253,356 


211,932 00 


1,007,216 00 


1837 


75.782,176 


25,890,566 


101,672,742 


337,264 00 


1,205,362 00 


1838 


80,923,608 


26,553,182 


107,476,790 


434,061 00 


1,505,210 00 


1839 


83,080,406 


28,143,791 


111,224,197 


553,475 00 


1,770,161 00 


1840 


85,287,291 


27,038,895 


112,326,156 


564,435 00 


1,755,539 00 


1841 


100,851,837 


27,501,820 


128,353,657 


642,153 00 


1,890,405 00 


1842 


104,322,013 


28,021,822 


132,343,83s 


660,759 00 


2,026,857 00 


1843 


105,496,382 


28,167,312 


133,663,794. 


934,899 00 


2,361,842 00 


1844 


107,142,152 


29,000,514 


136,142,666 


948,996 00 


2,340,663 00 


1845 


108,185,744 


35,974,725 


144,160,469 


1,006,001 00 


2,409,171 00 


1846 


109,940,636 


40,352,496 


150,293,132 


1,214,897 00 


2,580,073 00 


^0+^ 


306,798,730 


83,964,430 


410,763,100 


1,131,398 00 


2,847,673 00 


1848 


330,995,273 


90,072,818 


421,067,991 


1,265,769 00 


3,241,955 00 


1849 


335,839.3" 


95,000,074 


430,839,385 


1,296,547 00 


3,631,878 00 


1850 


341,389,838 


98,487,502 


439,876,340 


1,413,830 00 


4,227,708 00 


1851 


346,341,233 


115,807,387 


462,148,620 


1,687,392 00 


4,957,013 00 


1852 


354,937,147 


152,644,763 


508,581,911 


1,776,537 00 


5,674,335 00 


1853 


363,490,901 


229,905,947 


593,396,848 


3,026,324 00 


8,823,805 00 


1854 


569,868,410 


297,061,572 


866,929,982 


3,077,601 00 


9,092,339 00 


1855 


577,858,538 


283,018,815 


860,877,354 


2,754,807 00 


8,954,512 CO 


1856 


580,634,487 


240,026,550 


820,661,037 


2,626,132 00 


8,009,514 00 


1857 


585,620,682 


263,793,897 


849,414,579 


2,609,395 00 


8,673,298 00 


1858 


590,285,947 


240,514,084 


840,800,031 


2,978,122 00 


9,756,650 00 


1859 


594,114,004 


251,795,947 


845,909,051 


2,997,918 00 


10,083,608 00 


i860 


639,894,311 


248,408,290 


888,302,601 


3,503,713 CO 


10,817,676 00 


1861 


634,883,552 


248,966,532 


892,850,084 


4,056,379 00 


11,656,814 00 


1862 


645,670,080 


243,615,312 


889,285,292 


4,129,473 00 


10,135,284 00 


1863 


649,500,022 


286,871,222 


936,371,244 


4,722,608 00 


11,859,574 00 


1864 


655,498,100 


351,198,016 


1,006,696,116 


5,329,963 00 


16,595,639 00 


1865 


660,557,979 


409,047,876 


1,069,505,855 


5,663,367 00 


20,870,828 00 


1866 


663,647,542 


442,561,379 


1,106,208,921 


3,867,167 00 


18,868,437 00 


1867 


673,993,757 


464,762,022 


1,138,754,779 


3,981,099 00 


20,253,615 00 


1868 


683,452,487 


460,008,899 


1,143,461,386 


3,997,472 00 


20,489,148 00 


1869 


697,018,203 


459,762,252 


1,157,180,455 


4,045,476 00 


22,232,877 00 


1870 


707,846,636 


459,684,861 


1,167,731,697 


4,666,242 00 


23,463,631 00 


1871 


1,025,619,034 


476,510,937 


1,502,129,971 


4,350,728 00 


22,955,388 00 


1872 


1,030,163,528 


494,159,590 


i,524,323>"8 


4,414-557 00 


23,248,979 00 


X873 


1,041,763,931 


525,510,708 


1,567,274,639 


5,477,859 00 


26,131,353 00 


1874 


1,052,257,736 


528,121,588 


1,580,379-324 


5,030,367 00 


26,837,196 00 


1875 


1,062,915,044 


535,660,818 


1,598,575,862 


4,948,995 00 


27,952,971 00 


1876 


1,076,788,367 


520,681,599 


1,597,469,966 


4,626,629 00 


28,521,256 00 


1877 


1,084,455,378 


490,190,387 


1,574,645,765 


4,560,379 00 


27,514,650 00 


1878 


1,091,116,952 


461,460,552 


1,552,577,504 


4,496,376 00 


26,324,445 00 


1879 


1,093,768,904 


442,979,885 


1,536,748,789 


4,450,341 00 


25,756,665 00 


1880 


1,102,049,931 


456.166,134 


1,558,215,965 


4,513,240 00 


29,092,048 00 


1881 


1,101,457,383 


485:750,196 


1,587,207,579 


4,598,057 00 


27,606,380 00 


1882 


1,116,681,655 


518,229,079 


1,634,910,734 


4.735,748 00 


30,618,785 00 


1883 


1,131,058,750 


542,207,121 


1,673,265,871 


4,847,639 00 


31,387,041 00 


1884 


i,M5,475,2io 


528,298,871 


1,673,774,081 


4,681,339 62 


32,787,417 00 


1885 


1,160,165,882 


509,913,986 


1,670,079,868 


4,840,727 97 


33,737,435 44 


1886 


1,173,106,705 


515,569,463 


1,688,676,168 


4,894,593 98 


33,378,558 16 



There were re-valuations of the real property of the state for the years 1826, 1835, 
1841, 1847, 1854, 1861, 1871, and 1881. 



REVENUES AND EXPENDITURES. 



457 



6. TAXATION IN NEW YORK. 



SCHEDULE 



Shotving the aggregate valuation of real and personal property, the 
state and local taxes in N'ezv York state, and the rate per cent, for 
each year, fro??t 184.6 to i88y, inclusive. 







STATE TAXES, 


TOWN, 




\% 




AGGREGATE 








h ^ 


YEAR. 


VALUATION. 


EXCLUSIVE OF 


COUNTY, AND 


TOTAL TAXES. 


Itt 






SCHOOL TAX. 


SCHOOL TAX. 




Ij S 

^^5 


1846 . . 


$616,824,955 


$370,557 44 


$4,276,904 44 


$4,647,461 88 


0-753 


1847 . 




632,699,993 


302,579 27 


4,541,046 33 


4,843,625 60 


0.765 


1848 . 




651,619,595 


325,638 72 


4,969,819 51 


5,295,458 23 


0.812 


1849 • 




665,850,737 


334,555 96 


5,214,425 32 


5,548,981 28 


0-833 


1850 . 




727,494,583 


364,003 75 


5,948,783 58 


6,312,787 33 


0.867 


1851 . 




1,077,831,630 


578,546 88 


6,180,891 38 


6,759,638 26 


0.627 


1852 . 




1,168,335,237 


292,641 69 


6,715,046 39 


7,007,688 08 


0.600 


1853 . 




1,266,666,190 


1,285,125 88 


8,060,097 03 


9,345,221 91 


0.737 


1854 . 




1,364,154,625 


1,020,926 49 


8,615,164 36 


9,636,090 85 


0.706 


1855 




1,402,849,304 


1,751,717 78 


9,924,454 52 


11,676,172 30 


0.832 


1856 . 




1,430,334,696 


1,430,000 02 


11,312,845 04 


12,742,845 06 


0.890 


1857 




1,433,309,713 


3,221,775 42 


11,941,363 94 


15,163,138 36 


1-057 


1858 




1,404.907,679 


2,457,533 80 


12,968,004 78 


15,425,538 58 


1.098 


1859 




1,404,913,679 


2,458,599 10 


13,894,687 46 


16,353,286 56 


1. 164 


i860 




1,419,297,520 


4,376,167 35 


14,579,857 15 


18,956,024 50 


1-335 


1861 




1,444,767,430 


4,505,523 19 


15,896,753 29 


20,402,276 48 


1.415 


1862 




1,449,303,948 


5,797,215 79 


13,659,072 61 


19,456,288 40 


1-342 


1863 




1,454,454,817 


6,181,432 97 


16,865,367 69 


23,046,800 66 


1.584 


1864 




1,500,999,877 


6,754,499 45 


33,119,446 II 


39,873,942 56 


2.656 


1865 




1,550,879,685 


6,067,816 77 


39,893,623 85 


45,961,440 62 


2.963 


1866 




1,531,229,636 


7,369,042 63 


33,199,202 06 


40,568,244 69 


2.649 


1867 




1,664,107,725 


10,567,064 06 


35,951,837 56 


46,518,921 62 


2-795 


1868 




1,766,089,140 


8,035,705 59 


36,262,130 31 


44,298,435 90 


2.508 


1869 




1,860,120,770 


8,138,028 37 


38,033,503 13 


46,161,531 50 


2.482 


1870 




1,967,001,185 


11,827,225 07 


33,501,459 14 


50,328,684 21 


2-555 


1871 




2,052,537,898 


9,048,271 24 


36,626,215 68 


45,674,486 92 


2.222 


1872 




2,088,627,445 


16,970,097 99 


46,541,838 13 


63,511,936 12 


3.041 


1873 




2,129,626,386 


12,138,870 40 


39,305,665 87 


51,444,536 27 


2.416 


1874 




2,168,307,873 


13,015,847 24 


44-795,534 68 


57,811,381 92 


2.664 


1875 




2,367,780,102 


11,246,955 48 


45,679,515 21 


56,926,470 69 


2.404 


1876 




2,466,267,273 


5,446,340 23 


46,702,028 14 


52,148,368 37 


2. 114 


1877 




2,755,740,318 


5,626,303 15 


44,610,860 91 


50,237,164 06 


1.823 


1878 




2,738,378,600 


5,013,971 22 


43,033,270 75 


48,047,241 97 


1-754 


1879 




2,686,139,133 


4,773,269 24 


42,375,205 80 


47,148,475 04 


1-755 


1880 




2,637,869,238 


6,370,454 21 


42,747,327 97 


49,117,782 18 


1.862 


1881 




2,681,257,606 


2,976,195 94 


46,310,576 61 


49,286,772 55 


1.838 


1882 




2,783,682,567 


3,757,971 47 


43,815,848 60 


47,573,820 07 


1.709 


^^^3 




2,872,257,325 


6,235,670 66 


44,701,118 30 


50,936,788 95 


1-773 


1884 




3,014,591,372 


4,582,178 88 


47,790,528 12 


52,372,707 00 


1-737 


1885 




3,197,163,785 


6,065,673 65 


51,196,976 37 


57,262,650 02 


1.850 


1886 




3.224,682,343 


5,804,428 22 


52,305,650 74 


58,110,078 96 


1.802 


1887 . . 


3,361,128,177 


5,377,805 09 


51,953,386 49 


57,331,191 58 


1.705 



458 



S TA TIS TICAL INFO R MA TION. 



7. REVENUES OF NORTH CAROLINA. 

TABLE 

Showing the amount of Receipts and Disbitrsements of the State of 
North Carolina for each Fiscal Year from 1868 to 188'j inclusive. 





PUBLIC 


FUND. 




EDUCATIONAL FUND. 


TOTAL 
RECEIPTS. 


TOTAL DIS- 


< 


Receipts. 


Disburse 
ments. 




Receipts. 


Disburse- 
ments, 


BURSEMENTS. 


1868 


$1,925,564 98 


$2,019,909 


41 


$21,564 64 


$35,866 01 


$1,947,129 62 


$2,055,755 42 


18691 


8,550,877 62 


8,687,428 


97 


169,870 42 


167,158 18 


8,720,748 04 


8,854,587 15 


1870 


3,557,867 48 


3,454,214 


10 


333,973 76 


203,411 01 


3,891,841 24 


3,657,62s II 


I87I 


558,147 38 


645,579 


79 


229,990 79 


177,494 94 


788,138 17 


823,077 91 


1872 


654,476 21 


628,532 


70 


46,000 81 


173,275 92 


700,477 02 


801,808 62 


1873 


481,224 91 


524,168 


47 


41,705 01 


83,007 18 


522,999 92 


607,175 65 


1874 


667,114 49 


448,839 


68 


44,384 21 


56,260 94 


711,498 70 


504,869 62 


1875 


508,317 67 


551,816 


78 


43,677 08 


37,959 97 


551,994 75 


589,776 75 


1876 


524,039 17 


528,055 


22 


42,235 59 


54,702 93 


566,274 76 


582,758 15 


1877 


533,635 55 


613,264 


59 


33,783 57 


24,433 10 


567,419 12 


637,697 69 


1878 


533,322 04 


534,187 


07 


12,592 39 


4,915 03 


545,914 43 


539,102 10 


1879 


553,339 96 


577,658 


41 


5,269 65 


4,074 90 


558,609 60 


581,733 31 


1880 


546,796 04 


492,720 


33 


6,233 47 


4,000 00 


553,029 51 


496,720 33 


I88I 


645,743 05 


625,616 


59 


114,501 31 


50,651 25 


760,244 36 


676,067 84 


1882 


755,881 44 


629,112 


37 


12,712 05 


66,125 00 


768,593 49 


695,337 37 


1883 


965,107 08 


944,343 


76 


29,879 30 


135 00 


994,986 38 


944,478 76 


1884 


1,436,775 66 


785,641 78 


35,200 33 


76,228 65 


1,471,975 99 


861,870 43 


IS85 


378,957 62 


795,486 


26 


7,176 54 


5,195 14 


386,134 16 


800,681 40 


1886 


835,421 03 


1,112,652 


31 


7,626 25 


7,365 85 


843,047 28 


1,180,017 16 


1887 


847,864 36 


886,334 


02 


6,920 48 


5,524 21 


854,784 84 


891,858 23 



1 Much the larger proportion of the receipts and disbursements for 1869 are on 
account of subscriptions to railroad companies, etc., where no money actually 
passed. 



ROYALTY FROM PHOSPHATE ROCK. 459 

8- ROYALTY FROM PHOSPHATE ROCK IN SOUTH CAROLINA. 

By C. Meriwether, A.B., 

Graduate Student of the Johns Hopkins University. 

On the rice plantations along certain parts of the South 
Carolina coast, the planters noticed smooth, dark- colored 
nodules of rock scattered ov^er the fields. They could see 
no good in them, and grumbled at being compelled to pile 
them out of the way of the plough. Among these rice 
planters on the Ashley River, a few miles above Charleston, 
was a young geologist, — Francis S. Holmes, — whose atten- 
tion was directed to these nodules in 1837 by the "beauti- 
fully preserved forms of shells, teeth, and bones, mingled 
with the rocks filled with the casts of shells, corals, and 
coraUines." For sev.ral years he collected and preserved 
many of these specimens. The use of marl as a fertilizer 
for the South was very widely discussed, and in 1843 ^^^ 
Agricultural Society of South Carolina recommended the 
farmers to search for marl beds. In common with many 
other planters, Mr. Holmes sank a pit for this purpose on 
his land, and came across a stratum of the same nodules a 
few inches below the surface, and the situation of the phos- 
phatic deposits was established. On finding stone arrow- 
heads and hatchets in this layer, he thought he had made 
a discovery that would aid in fixing the age of the deposit ; 
but an older geologist derided the conclusions drawn from 
this fact, and stated that these specimens might have got 
in the stratum by accident through a hole from an upturned 
tree or the burrowing of an animal. Afterwards he came 
across human bones, but carelessly threw them away, think- 
ing that they found their way there by accident, just as the 
older geologist had explained the position of the stone 



460 STATISTICAL INFORMATION. 

implements. These discoveries really fixed the palgeontolo- 
gical age of the post-Pleiocene beds, as the prehistoric age 
of man; but Professor Holmes never felt safe in drawing 
this conclusion until he read the work of an English geolo- 
gist, — Professor Ansted, — on the same deposits in England. 
It is interesting to note that the age of this formation was 
established in South Carolina in 1844, while the discoveries 
for the determination of the age of the same formation in 
Europe were not made until 1854. 

Although the situation of the beds was thus established, 
no one suspected them as being of any commercial value ; 
but the knowledge would have been blundered into had it 
not been for the wise reasoning of the scientist. An old 
planter in 1843 resolved to see if these piles of nodules on 
his land could not be made serviceable. At a considerable 
expense he pounded up and ground into powder a large 
quantity of them, and was going to scatter it on his land, 
when the scientist, Mr. RufiEin, again stepped forward, and 
prevented a discovery that was not made till thirty years 
later. He advised him to throw the powder away, since it 
could possess no fertilizing properties. 

After these two checks by the scientists, nothing more 
was done tiU the close of the Civil War. In 1867 Dr. N. A. 
Pratt, a distinguished chemist from Georgia, analyzed a 
specimen of the rock, and found that it contained a large 
percentage of phosphate of lime. Other specimens gathered 
from the fields showed as high as sixty per cent., and he 
knew that he had made an important commercial discovery. 
At this time fertilizers were being very widely introduced 
into the South, and phosphate of lime was a valuable ele- 
ment in its manufacture. Doctor Pratt and Professor 
Holmes tried unavailingly for six weeks to induce the capi- 
tahsts of Charleston to undertake the development of the 



ROYALTY FROM PHOSPHATE ROCK. 461 

industry. They then did as enterprising Southerners without 
capital have so often done since the war : they went North 
and showed the advantage of it to Northern men of means, 
and two gentlemen in Philadelphia were the first to invest. 

Of course, theories have been advanced to explain these 
deposits. It was supposed that they were the remains of 
animals drifted there during the glacial periods, but the 
advocates of this view overlook the fact that the nodules 
are geological rock, and not the fossilized remains of ani- 
mals. The theory the most generally accepted is that 
advanced by Professor Holmes. The Eocene marl, in this 
theory, is the foundation of the whole seacoast land of South 
Carohna, and in the ages past extended out under the ocean. 
The mollusca and other animals bored into it, and honey- 
combed it to the depth of several feet. The pieces were 
broken off and rolled shoreward by the water, and finally 
left in basins hollowed out in the sand. This action of the 
water accounts for their smooth, nodular appearance. When 
the land was raised, these basins became inland lakes, and 
as ev'aporation took place, a layer of salt remained at the 
bottom, covering the stratum of nodules. But the large 
percentage (sixty) of carbonate of lim.e in the original 
Eocene marl has been nearly all converted into phosphate 
of lime in the nodules. Two theories have been advanced 
to explain this change of structure. One attributes it to 
the action of phosphoric acid which was generated from the 
faeces and remains of animals, vast herds of which were 
attracted to these salt-beds as to salt-licks. But this was 
rejected since nodules the poorest in phosphate of lime 
were found in the midst of the most of bones. The other 
theory assumes that certain mollusks largely wrought this 
change by their power of secretion before the nodule es- 
caped from the action of the sea-water. This was assisted 



462 STATISTICAL INFORMATION. 

by chemical agents after the removal of the deposits beyond 
the action of the tides. This is a general cause, not a local 
one like that connected with the supposition of salt-licks, 
and harmonizes with the wide distribution of the formation. 
The occurrence of these deposits is confined to the tide- 
water country, reaching from North Carolina to Florida and 
extending sixty miles inland in some cases, but none are found 
at an elevation above that of mean high tide supplemented 
by the action of storms. No careful survey, unfortunately, 
has ever been made by the state, but Professor Shepard, of 
Charleston, in 1880 approximately placed their extent at 
\\N0 hundred and forty thousand acres, of which he consid- 
ered only ten thousand accessible. Estimates of the quan- 
tity, in consequence, vary from five million to five hundred 
million tons. The first is Professor Shepard's estimate, and 
now that amount has already been mined without any hint 
of failure of supply. The average yield per acre on land is 
eight hundred tons. The formation is known as land or 
river rock, according to the element in which it is found. 
The land rock occurs from two to ten feet below the sur- 
face, in a layer averaging about eight inches in thickness, 
and composed of nodules varying in size from a potato to 
several feet in diameter, and in weight from a few ounces 
to a ton. It is very simply mined by removing the overly- 
ing earth and securing the deposit. The river rock is gath- 
ered by hand picking in shallow water, by diving in a depth 
of ten or twelve feet, and by dredging in a depth beyond 
thai to twenty feet. The industry has been a great boon to 
labor, as common workmen make ^1.75 a day, while divers 
have earned as much as |i8 per week, though working not 
more than six hours a day, owing to the tides. The rock is 
washed usually by expensive machinery, and dried often by 
hot-air process, and then is ready either for shipment or 



ROYALTY FROM PHOSPHATE ROCK. 463 

manufacture. The average price per ton has been about six 
dollars, and the value of this product in 1887 was more than 
three times as great as that of the precious minerals mined 
in all the Southern states. The total value of the raw- 
product has been at least $30,000,000. 

When the industry first began to be developed, the atten- 
tion of capitalists was chiefly directed to the land rock, and 
even up to 1880 the yield from the river beds was only half 
of that from the land deposits, but in 1887 it was nearly 
equal to that from the other source. The bed of all navi- 
gable streams, and generally all salt marshes between high 
and low water mark, and some additional swamps, lands, 
and streams were claimed by the state, and the term river- 
rock is often applied to the state phosphate possessions. 
The state at the beginning placed a royalty of one dollar 
per ton on her deposits, but, even with this, it was found 
more profitable to mine the river beds and pay the royalty 
than to invest in the enterprise on land. The plan was 
adopted of leasing certain defined territory to a company, 
and of issuing licenses to private persons to gather from the 
state possessions. The leases have been given for various 
times, from six months to thirty years. The royalty is uni- 
form, and complaint has been made of the unfairness of 
requiring rich and poor deposits to pay the same burden. 
This could be obviated by selling the right to mine in any 
given Hmits at public auction, but nothing has so far been 
done. The state control of this interest has been, on the 
whole, successful. Up to 1879 the cost of collection was a 
little over five per cent., and since then the machinery of 
the Department of Agriculture has been utihzed for the pur- 
pose, and the cost is practically reduced to almost nothing. 
The total amount of rock from both sources is nearly four 
and a half million tons, of which almost one and three- 
fourths million tons were from the river rock. 



464 STATISTICAL INFORMATION. 

The following table shows the total amount of royalty to 
date : — 

Receipts of Phosphate Royalty from 1872 to 1879. 
Under Inspectors of Phosphates. 
1872101877. (Both inclusive. See Report of 
Attorney-General, Reports and Resolutions, 

1877-78) $307,042.30 

1878 93,115-98 

1879 (partly back royalty) 127,507.47 

$527,665.75 

Receipts of Royalty from 1880 to 1885. 

Under Department of Agriculture. 

1880 $65,337.92 

1881 124,541.14 

1882 138,254.14 

1883 125,793-41 

1884 i53»797-62 

1885 176,754.91 

$784,479.14 

1886 196,089.88 

1887 208,842.61 

$1,189,411.63 

Grand total $1,717,077,381 

1 The revenues of the state government for three years were as 
follows : — 

1872-1879 (both inclusive) $10,232,884 10 

1880 547>i54 72 

1881 782,370 17 

1882 852,449 76 

1883 920,839 36 

1884 898,951 26 

1885 866,026 6s 

1886 810,477 01 

1887 977.363 74 

$6,655,632 67 

Grand total $16,888,516 77 

The state expenditures were abnormally high to 1877 on account of 
the extravagance of the party in power. 



/ROYALTY FROM PHOSPHATE ROCK. 465 

One company paid nearly five-sixths of the royalty for 
1 88 1, though there were several others. This source of 
revenue has gradually increased from less than one per cent. 
to more than twenty per cent, of the gross revenues of the 
state in 1887. At first the returns were made on the dried 
rock, but in 1882 it was very properly provided that the 
basis should be the crude article. 

Although the state engages in no productive enterprise of 
importance, the temptation to assume direct control of this 
interest led Capt. J. C. Seegers, of the House of Representa- 
tives, to introduce a bill in the legislature in 1887, providing 
for the direct management of the industry by the state, to 
be worked with her convicts. The title of the bill reads : 
" To exempt from taxation all property, real and personal, 
within the state of South Carolina, and to utilize the re- 
sources of the state, especially her phosphate beds and con- 
vict labor, in the stead thereof." He also intended the 
crude rock to be manufactured into fertihzers by the state. 
The plan seems plausible. There are over a thousand con- 
victs, nearly all of them able-bodied negroes accustomed to 
such rough work under a hot sun. They are more easily 
controlled than whites, and there is no danger of a general 
outburst, under a vigilant overseer. They have been worked 
in chain gangs in building railroads, and though there was a 
great outcry of inhuman treatment, yet this was probably 
due to lack of proper oversight by the penitentiary authori- 
ties, rather than inherent in the system itself. The average 
cost to the state of maintenance of the convicts is about 
twenty-five cents a day. The phosphate companies do not 
pay less than a dollar a day for their hands, and this allows 
a wide margin for alleged difference in efficiency of manage- 
ment between private and pubHc control. Some of the 
companies pay the royalty and still make large profits, — • 



466 STATISTICAL INFORMATION. 

sometimes, it is stated, from thirty to fifty per cent., — and 
the state ought, with the advantages of cheaper labor, to 
make larger profits. The profits to the state from mining 
and manufacture might be one dollar per ton, besides the 
royalty. Then, if the yield should be increased to five hun- 
dred thousand tons, as Captain Seegers thought, the entire 
expenses of the state government would be met, and taxa- 
tion for state purposes be abolished. Nothing, though, so 
far has come of the bill except an almost unanimous defeat.^ 

9. ONONDAGA SALT SPRINGS. 

The Onondaga Salt Springs Reservation, a tract of land 
about ten miles square, including the city of Syracuse, one 
or two neighboring towns, and Onondaga lake, was ceded 
to the state of New York by the Indians in 1795, i^ consid- 
eration of a cash payment of $1000, and annual royalties 
of $700 and 150 bushels of salt. The state, by this treaty, 
is bound to hold and work the property forever. Under an 
act of 1797, this property was surveyed, divided into lots 
of ten acres each, and leased to " squatters " then in occu- 
pation. Each lessee was required to manufacture ten 
bushels of salt per annum. At the same time a tax of four 
cents per bushel was imposed, and a superintendent ap- 
pointed, by whom the salt was inspected and stored, the 
state receiving in addition to the above, one cent extra for 
storage. The brine was at this time raised by the individual, 
the state permitting one manufacturer to use, if needed, the 
surplus of water, when his neighbor had all he wished. In 
1805 the duty was fixed at three cents. In 181 7 it was 

1 Authorities : Handbook of South Carolina, issued by the state; 
The Phosphate Rocks of South Carohna, by F. S. Holmes; Report of 
Commission of Agriculture of South Carolina for 1880; Review of 
Operations of Department of Agriculture for 1885. 



ONONDAGA SALT SPRINGS. 



467 



raised to twelve and a half cents, in order to aid in the pay- 
ment for the Erie Canal. A sum of ^2,055,458.06 was 
thereafter contributed from this revenue for the construc- 
tion of canals. From 1817 to 1825 the Superintendent 
reported to the Commissioner of the canal, but after the latter 
date, to the legislature. In 1822 a bounty of three cents per 
bushel was placed on coarse salt delivered on the Hudson or 
the lakes, the laborers in the salt work being also exempt from 
jury and military service. The duty was reduced to six 
cents in 1834, and to one cent in 1846, and has since re- 
mained the same. The state, in return for this duty, sinks 
wells, raises water, furnishes it to the manufacturer, and 
inspects and weighs the salt. 

In 1859, on account of frequent troubles among the 
manufacturers, leases were issued to them for thirty years. 

The salt springs were at one time true springs, but from 
the increased consumption of the brine, it has become nec- 
essary to sink wells. 

Of late the industry has been much depressed, owing to 
competition with foreign salt, and with the Michigan salt. 



NUMBER OF BUSHELS PRODUCED BETWEEN JUNE 20, 1 797, AND 1886, 





326,42 


1,643. 




In 1797 . 


• • 25,474 bush. 


In 1847 • • • 


3,951,355 bush 


" 1807 . 


. . 175,448 *' 


" 1858 . . . 


7.033,391 " 


« 1817 . 


. . 408,655 « 


" 1862 (max.) . 


9,053,874 " 


« 1827 . 


. . 983,410 " 


" 1872 . . . 


7,930,925 " 


" 1837 . 


. . 2,167,287 " 


" 1886 . . . 


6,101,757 " 



Since 1862 there has been a decline, the average down to 
1872 being about 8,000,000 bushels, and from 1872-1886, 
7,200,000 bushels. 



468 



S TA TIS TICAL INFORM A TION. 



NET REVENUE DERIVED FROM MANUFACTURE OF SALT, AND PAID 
INTO THE GENERAL FUND SINCE DUTIES WERE REDUCED TO ONE 
CENT PER BUSHEL. 



1846 ^7.705 48 

1S47 9,717 63 

1848 21,491 46 

1849 20,153 69 

1850 15,104 87 

1851 13,337 55 

1852 19,284 61 

1853 29,557 19 

1854 ...... 23,711 57 

1855 10,867 46 

1856 ....... 9,690 79 

1857 (deficit, $6,603 01). 

1858 19,766 93 

1859 27,306 38 

i860 12,342 50 

1861 26,761 28 

1862 49,696 21 

1863 38,064 94 

1864 29,906 96 

1865 18,620 59 

1866 24,557 48 



1867 i^25,o89 73 

1868 37,244 c6 

1869 41,211 09 

1870 24,411 38 

1871 34,507 08 

1872 33,991 78 

1873 15,130 42 

1874 3,106 88 

1875 5,903 66 

1876 4,871 08 

1877 7,422 99 

1878 14,803 43 

23,221 62 



1879 
1880 
1881 
1882 
188^ 



1,313 20 

20,045 52 

21,204 30 

4,056 03 



1884 3,452 55 

1885 5,349 59 

1886 (deficit, $7,011 79). 



The total net revenue derived from the manufacture from 
1818 to 1886 (inclusive) = $4,296,664.50.^ 

1 The facts presented concerning the salt springs of New York have 
been gathered from the reports of the Onondaga Salt Spring Com- 
missioners. 



III. 

REVENUES AND EXPENDITURES OF CITIES. 

I. BUDGETS OF BALTIMORE, BOSTON, CHICAGO, NEW YORK, 
PHILADELPHIA, AND ATLANTA. 

Baltimore. 

THE gross receipts into the treasury for the year ending 
December 31, 1887, were ^8,446,439, and were chiefly 
from the following sources : — 

Taxes ^4,210,112 

Public schools, tuition fees, etc 6,766 

Market houses, rent of stalls 58,287 

"Wharfage and rent of wharves 33>56i 

General licenses . . 44,609 

Auction duties 7j43I 

Dividends on stock in B. & O. R. R 130,000 

Water rents 745,446 

Passenger railway companies 132,167 

From the state for public schools 147,403 

Temporary loan 1,510,000 

Receipts to pay interest on loans 896,704 

Sale of stock 243,285 

The total disbursements were $8,403,930. Of this 
^4,541,357 was spent on account of expenses of city 
government, the following being the principal items of 
expense : — 

Interest on the public debt ^915,987 

Expenses of law courts 118,806 



470 STATISTICAL INFORMATION. 

Expenses of jail magistrates, etc $103,587 

Public schools (less amount paid by state) . . . 594,089 

Expenses of poor 210,739 

Police department 702,882 

Street cleaning department 263,934 

Fire department 214,226 

■« Street lighting 221,203 

Parks, etc 52,080 

Salaries 72,624 

City council 52,925 

For expenses other than those of city government there 
was paid out ^3,862,573; of which $896,704 was in pay- 
ment of interest, $1,310,000 in payment of temporary loans, 
^283,647 for improvements, and $215,312 for the opening 
and paving of streets. 

The assessed valuation of real estate for 1887 was 
$200,775,614; of personal estate, $64,784,338: total, 
$265,559,952. The rate of the city levy was $1.60 on 
the $100. 

The funded debt of the city, December 31, 1887, was 
$35,377,176, the greater part of it drawing interest at 5 and 
6 per cent. There was on the above date a guaranteed 
debt, i.e. indorsement of railroad mortgages, amounting to 
$992,000, making a total debt of $36,369,176. For the 
payment of the annual interest on $19,645,784 of this 
amount provision has been made, viz. interest received on 
water, park, and railroad loans, etc., and there remains but 
$16,723,392 upon which interest is paid by taxation. 

The productive assets of the city, December 31, 1887, 
including the sinking fund of $6,039,241, amounted to 
$17,711,665, and the unproductive assets to $15,610,500. 



REVENUES AND EXPENDITURES. 471 



Boston. 

The following statistics are for the fiscal year ending April 
30, 1887. For this period the total receipts for the city of 
Boston were ^20,476,111, the expenditures ^18,562,518. 

The principal receipts were the following : — 

Taxes ^8,885,881 

Bank taxes 187,069 

Bank taxes collected for state 600,004 

Corporation taxes, share from state 648,225 

Taxes on foreign ships, share from state .... 9,422 

Water-works, rates, etc 1,274,498 

Liquor licenses, fees, etc 977,247 

From several departments, including income from 

trust funds 699,490 

Interest on balances, taxes, etc 116,894 

Pedlers 775 

Loans 3,833,800 

Temporary loan 2,000,000 

Sinking fund for payment of debt 615,109 

The ordinary expenditures, including interest on the city 
debt, and exchange on the part of interest ($2,237,479), 
and street improvements charged to general appropriation, 
were $10,565,983. Of the remainder the principal sums 
paid out' were : to the sinking fund, $625,005 ; state tax, 
^555j87<^^ sewerage, $130,179; special street improve- 
ments, $610,564 ; parks, $243,745 ; additional water supply, 
$455,916; $2,000,000 in redemption of loan; $600,753, 
state's proportion of bank tax; and $149,979, state's pro- 
portion of liquor license tax. 

The total assessed value of real property for 1886 was 
$517,503,275 ; of personal estate, $193,118,060 : total valu- 
ation, $710,621,335. The rate of taxation was $12.70 per 
$1000. 



472 STATISTICAL INFORMATION. 

The total funded debt of the city, April 30, 1887, was 
^45,966,963. 

There was at the same date in the sinking fund, $19,946,811 
for the redemption of the debt. 

Chicago. 

The total receipts of this city for the year ending Decem- 
ber 31, 1887, were $13,863,300; the total expenditures, 
;^i 3,2 20,2 20. The foUo^ving are the principal receipts : — 

Taxes $5,166,156 

Licenses 2,225,769 

Special assessment, paving, etc 2,664,534 

From water fund, rents, etc 1,642,682 

From school fund, rents, dividends, tax .... 1,190,409 

Rents 39,505 

Fines, police courts 79) 186 

Fees 987 

The principal objects of expenditure were : — 

Public works department $1,304,845 

Fire department 826,048 

Health department 279,788 

Police department 1,305,562 

Schools, buildings, repairs, etc 2,703,315 

Special assessments, paving, etc 2,567,096 

Street lighting 542,047 

Sewerage 346,422 

Salaries 127,326 

On account of water fund 1,804,204 

The cost of collection of taxes was $58,145, or a little 
over I per cent, of total taxes collected. 

The total equalized valuation of real estate for 1887 
was $123,169,455 ; the total assessed valuation of per- 
sonal property was $38,034,980; total equalized valuation 
$161,205,535. 



REVENUES AND EXPENDITURES. 473 

The total bonded debt of the city, January i, 1888, was 
^12,588,500, the greater part drawmg interest at 7 per cent. 

New York. 

The receipts from taxes during the year ending December 
31, 1886, were $31,568,097. 

The receipts into the treasury on account of the general 
fund were $1,966,225, chiefly as follows : — 

Railroad franchises $98,899 

Fees from county clerk 142,878 

Interest on taxes 609,128 

Licenses, marshal 43,I30 

School moneys from state 589,311 

Department of public works 5Ij734 

Department of parks 17,022 

Department of public charities 35jI85 

The receipts on special and trust accounts were $2,128,037. 
The following were the most important items : — 

Excise licenses $665,605 

Special assessment, local improvement fund . . . 453,911 
Five per cent, net earnings of Greenwich St. Elevated 

Railway 20,526 

Intestate estates 15*873 

Theatrical licenses 22,300 

Into the sinking fund for the redemption of the city 
debt there was $11,978,385. The principal items were the 
following : — 

Market rents and fees $292,199 

Bonds and mortgages 95*787 

Licenses 65,607 

Dock and slip rent 1,231,826 

Revenue from investments 1,731,112 

Interest on deposits 77>547 



474 STATISTICAL INFORMATION. 

Sale of real estate $5,100 

Special assessments 628,366 

Railroad franchises 95>9ii 

N. Y. & Brooklyn bridge (surplus) 50j500 

Surplus revenues of interest fund 3,550,00 

Investments paid off 3,250,950 

And into the sinking fund for the payment of interest on 
the city debt there was received 12,976,648; the largest 
and principal item is water rent, $2,485,658; interest, fees, 
fines, etc., make up the remainder. 

The total amount received for account of the city treasury 
(including loans of $22,607,213, and a few more items in 
addition to those mentioned above) was $58,354,851, and 
for account of sinking funds, $14,955,033, making the total 
receipts $73,309,884. 

The payments on account of the city treasury were 
$57,979,620 ; on account of the sinking funds, $13,801,123 ; 
total payments, $71,780,743. 

The purpose of payments of the sinking funds is e\'ident ; 
the principal expenses payable from taxation and the gen- 
eral funds were : for state taxes, $4,199,606 ; interest on debt, 
$7,245,205 ; redemption of debt, $857,218; department of 
public works, $2,410,251; public parks, $925,672; public 
charities, etc., $1,526,651 ; police department, $3,942,322; 
street cleaning, $1,103,371; fire department, $1,872,576; 
board of education, $3,994,116; asylums, etc., $1,148,834. 
On the special and trust accounts the largest payment was 
revenue bonds, $16,070,600. 

The assessed valuation of real estate for 1886 was $1,203,- 
941,065 ; of personal estate, $217,027,221 ; total, $1,420,- 
968,286. The rate of taxation of real and personal property 
was 2.29 per cent. ; of corporations subject to local tax, 
1.9945 per cent. 



REVENUES AND EXPENDITURES. 475 

The total funded debt of the city, December 31, 1886, was 
;^i25,982,736, of which bonds to the amount of $32,684,190 
were held in the sinking fund. 

The amount in the sinking fund on the above date, in- 
cluding the above city bonds, was $41,205,470. 



Philadelphia. 

The total receipts for the year ending December 31, 1887, 
were $17,584,256; the total disbursements, $17,633,304. 
The chief sources of revenue were the following : — 

Taxes (current) ^10,607,754 

Taxes (delinquent) 729,152 

Poll tax 30,086 

Public building tax 793 

State tax (after settlement) 12,579 

Highways 56,458 

Water 1,993,643 

Fines and penalties 59,4io 

Licenses — pawnbrokers, etc 9,030 

State appropriation for schools .189,156 

City property 102,672 

Register of wills 102,568 

Bureau of gas 2,749,189 

Bureau of gas (interest account) 220,500 

City solicitor 167,651 

The expenditures are classified as follows : — 

Interest on funded debt ^3,458,811 

Sinking funds 630,100 

Warrants of previous years 460,473 

Erection of public buildings 505,435 

Park fund 5,786 

Mandamuses 356,525 

Loan 254,825 

Amount paid departments 11,961,349 



476 STATISTICAL INFORMATION. 

Property is divided into three classes, according as it pays 
full, suburban, or farm rate ; the rates being, for 1886, $1.85, 
$1.23^, and $0.92!- respectively. The amount of property 
paying full rate was I5 69,5 8 7,035 ; suburban rate, $40,203,- 
885; and farm rate, $1,888,392 : total, §628,679,312. Horses 
and cattle pay full rate ; furniture and pleasure carriages full 
rate, in addition to the state tax ; while carriages for hire, 
money at interest, and waiches pay the state tax only. 

The funded debt of the city, January i, 1888, was 
;^57,967,395, being $9,500,921 less than January i, 1883. 

The city's means of paying debt amount to $29,717,824; 
$1,125,000 consisting of stock in the Sunbury and Erie Rail- 
road, the remainder of sinking fund securities. The net debt 
was thus $28,249,571. 

Atlanta, Georgia. 
Atlanta is taken as a typical Southern city, though its 
budget is a comparatively small one. 

The following receipts are given for 1887 : — 

General tax $522,109 

Liquor licenses 775 

Business licenses 48,191 

Dray and hack licenses 55927 

Cemetery license 524 

Paving and curbing 34,3 1 8 

Water-works 38,257 

Sale gas stock 95,643 

Sale bonds 25,000 

Recorders' court (fees) 15,854 

Commission sales, etc 5, 306 

Miscellaneous sources 5,571 

Total receipts $797,475 

The tax collector's office shows the following assessments 
and collections : — 



REVENUES AND EXPENDITURES. 477 

Real estate, returned .... $24,532,777 \\ $367,992 

Real estate, not returned . . 400,287 \\ 6,004 

Personalty 7,304,703 \\ 109,571 

Street tax 12,001 

Sanitary assessment 14,683 

Total $510,251 

It will be noticed that the Hquor license tax is small. The 
year preceding the receipts from this source were $37,708. 
A high license has again been placed on the sale of liquor, 
and the city will receive a large revenue therefrom during 
the ensuing year. 

The expenditures of the city for the year am.ounted to 
^785,152, the principal items being the following : — 

Salaries $24,015 

Public buildings 5,647 

Sewers, etc. ....... o 23,823 

Paving and curbing 66,065 

Streets (ordinary) 48,396 

Public schools 72,129 

Fire department 45,889 

Paupers and relief 12,067 

Street lighting 19,1 77 

Police department 52,865 

Sanitary department 24,802 

Interest 156,357 

The bonded debt of Atlanta, January i, 1887, was 
^2,220,000. 



478 



S TA TIS TICAL INFORM A TION. 



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REVENUES AND EXPENDITURES. 479 

It may be well to repeat again in this place what I have 
several times said in regard to the caution with which tables 
like the following should be used. The statistical table in 
regard to taxation in Baltimore gives a glaring instance of 
the faultiness of our ordinary iinancial statistics. The valu- 
ation in Baltimore increased in 1836 from ^3,787,762 to 
^42,931,960. Of course this is due to a new assessment, 
and the decreased valuation in 1837 cannot be taken as an 
indication of a real depreciation of property. It is probably 
due to complaints on account of over- valuation. The reader 
will also notice that the fall of the rate of taxation to 66f 
cents in 1836 from $4.77! on the ^100 of assessed valuation 
was accompanied by a real increase in taxation, because the 
decrease in the tax rate was not so considerable as the in- 
crease in valuation. This is an unusual case of difference 
between the real and the nominal rate of taxation, but it is 
necessary always to be careful in the use of tables concern- 
ing taxation. If proper care is exercised, they are useful 
despite their imperfections. I repeat these cautions in so 
many places, because tables in books are frequently con- 
sulted by those who have perused neither what follows nor 
what goes before. 



480 



5 TA TIS TICAL INFORM A TION. 



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REVENUES AND EXPENDITURES. 



483 



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484 



S TA TIS TICAL INFORM A TION. 



1 


O r^ 
















Collected 
within the 
year upon 
the Levy ior 
that year. 


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Tax Rate 
in the Lim- 
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per $ioo.i 


5 vB ^ 5 

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Year. 




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t^ r- s « <; 



REVENUES AND EXPENDITURES. 



485 



Boston} 

Population by census of i860, 177,840. Population by 
United States census of 1870, including municipalities an- 
nexed, 250,256. Population by state census of 1875, 
341,919. United States census of 1880, 362,839. State 
census of 1885, 390,393. 



YEAR.2 


REAL ESTATE. 


PERSONAL 

ESTATE. 


TOTAL 
VALUATION.! 


RATE TAX 
PER $1000. 


18673. 


$250,587,700 


1194,358,400 


$444,946,100 


$15.50 


1868 . 


287,635,800 


205,937,900 


493,573,700 


12.30 


18694 . 


332,051,900 


217,459,700 


549,511,600 


1370 


1870 . 


365,593,100 


218,496,300 


584,089,400 


15-30 


I87I . 


395.214,950 


217,448,600 


612,663,550 


13.10 


1872 . 


443,283,450 


239,440,850 


682,724,300 


11.70 


1873^. 


470,086,200 


223,745,200 


693,831,400 


12.80 


1874 . 


554,200,150 


244,554,900 


798,755.050 


15.60 


1875 . 


558,941,000 


235,020,895 


793,961,895 


1370 


1876 . 


526,157,900 


222,838,310 


748,996,210 


12.70 


1877 . 


481,407,200 


205,433,386 


686,840,586 


13.10 


1878 . 


440,375,900 


190,070,966 


630,446,866 


12.80 


1879 . 


428,777,000 


184,545.692 


613,322,692 


12.50 


1880 . 


437,370,100 


202,092,395 


639,462,495 


15.20 


I88I . 


455,388,600 


210,165,997 


665,554,597 


13.90 


18826. 


467,704,150 


204,793,812 


672,497,962 


15.10 


1883 . 


478,318,900 


204,113,771 


682,432,671 


14.50 


1884 . 


488,130,600 


194,526,058 


682,656,658 


17.00 


1885 . 


495,973,400 


189,605,672 


685,579,072 


12.80 


1886 . 


517,503,275 


193,118,060 


710,621,335 


12.70 



1 The following tables concerning Boston are taken from Auditor's 
Report for Boston, 1886-87, pp. 265-267 : — 

2 Included in the total valuation of 1865, and all subsequent years, 
was an assessment upon corporations chartered by the Commonwealth 
of Massachusetts, for real estate and machinery. The last item is taxed 



486 



S TA TIS TICAL INFORM A TION. 



AMOUNT AND RATE OF TAXATION. 











RATE PER $1,000. 


YEAR. 


STATE TAX. 


COUNTY TAX. 


TOTAL TAX. 


STATE. 


CITY AND 
COUNTY. 


1867 


^1,694,150 


14,962,261 


$6,656,411 


3-94 


11.56 


1868 


723,140 


5,161,689 


5,884,829 


1-51 


10.79 


1869 


903,925 


6,375,399 


7,279,324 


1. 71 


11.99 


1870 


933,775 


7,703,087 


8,636,862 


1.65 


13.65 


I87I 


933,775 


6,856,669 


7,790,444 


1-57 


"•53 


1872 


736,480 


7,023,362 


7,759,842 


I. II 


10.59 


1873 


828,540 


7,809,552 


8,638,092 


1.23 


"•57 


1874 


802,120 


11,243,782 


12,045,902 


1.04 


14.56 


1875 


802,120 


9,721,016 


10,523,136 


1.04 


12.66 


1876 


742,932 


8,527,872 


9,270,804 


1.02 


11.68 


1877 


619,110 


8,135,104 


8,754,214 


0.93 


12.70 


1878 


412,740 


7,466,410 


7,879,150 


0.67 


12.13 



as personal, and is the only personal estate taxable by local assessors 
to a Massachusetts corporation. 

^ City of Roxbury united with Boston, with valuation of real, $18,- 
265,400; personal, $8,286,300 : total, $26,551,700. 

* Town of Dorchester, with valuation of $12,826,200 real, and 
$7,489,500 personal: total, $20,315,700. 

° City of Charlestown, and Towns of West Roxbury and Brighton : — 
Real. Personal. Total. 

Charlestown . . . $26,016,100 $9,273,582 $35,289,682 

W. Roxbury . . . 16,254,350 5,894,250 22,148,600 

Brighton .... 11,964,450 2,584,081 14,548,531 

6 In consequence of Act 188 1, exempting money loaned on mort- 
gages of real estate, the personal valuation receded, notwithstanding 
large gains were made upon the other items of personal estate. 



REVENUES AND EXPENDITURES. 



487 





STATE 
TAX. 


COUNTY 
TAX. 


CITY TAX. 


TOTAL TAX. 


RATE PER $1 


,000. 




STATE. 


COUNTY. 


CITY. 


1879 


^206,370 


$369,200 


$6,916,940 


$7,492,510 


$0.20 


$0.46 


$11.84 


1880 


619,110 


260,000 


8,587,786 


9,466,896 


0.86 


0.27 


14.07 


I88I 


619,110 


260,000 


8,173,282 


9,052,392 


0.81 


0.25 


12.84 


1882 


825,480 


291,200 


8,798,073 


9,914,753 


1. 12 


0.29 


13.69 


1883 


578,055 


291,200 


8,778,556 


9,647,811 


0.72 


0.28 


13-59 


1884 


770,740 


301,600 


10,216,029 


11,288,369 


1. 00 


0.29 


15-71 


1885 


578,055 


301,600 


7,814,092 


8,693,747 


0.71 


0.27 


11.82 


1886 


555.870 


386,568 


7,897,240 


8,839,678 


0.65 


0.40 


11.65 



f88 



S TA TIS TICAL INFORM A TION. 







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REVENUES AND EXPENDITURES. 



489 





pnpiir.A- 


TOTAL 








BONDED IN- 


YEAR.; 




INCREASE. 


TOTAL TAX. 






TION. 


VALUATION. 






DEBTEDNESS. 


1850 


28,269 


$7,220,249 


^543,365 


$25,270 87 


^93,395 


185I 




8,562,717 


1,342,468 


63,385 87 




1852 


48,000 


10,463,414 


1,900,697 


76,948 96 


126,035 


1853 


60,652 


16,841,831 


6,378,417 


135,662 68 


189,670 


1854 


75,000 


24,392,239 


7,550,408 


499,081 64 


248,666 


1855 


80,000 


29,992,893 


2,600,654 


206,209 03 


328,000 


1856 


84,113 


31,736,084 


4,743,191 


396,652 39 


435,000 


1857 




36,335.281 


4,599,197 


572,046 00 


535,000 


1858 




35,991,732 




430,190 00 




1859 




36,553.380 


561,648 


543,614 00 


1,855,000 


i860 


109,206 


37,053,512 


500,132 


573.315 29 


2,336,000 


I86I 




36,352,380 




550,968 00 


2,362,000 


1862 


138,186 


37,139,845 


787,465 


564,038 06 


3,028,000 


1863 




42,667,324 


5,527,479 


853,346 00 


3,422,500 


1864 


169,353 


48,732,782 


6,065,458 


974,665 64 


3,544,500 


1865 


178,492 


64,709,177 


15,976,395 


1,294,183 50 


3,701,000 


1866 


200,418 


85,953.250 


21,244,073 


1,719,064 05 


4,369,500 


1867 




195,026,844 


109,073,594 


2,518,472 00 


4,757,500 


1868 


252,054 


230,247,000 


35,220,156 


3,223,457 80 


6,484,500 


1869 




266,024,880 


35.777,880 


3,990,373 20 


7,882,500 


1870 


306,605 


275,986,550 


9,961,670 


4,139,798 70 


11,041,000 


1871 




289,746,470 


13,759,920 


2,897,464 70 


14,103,000 


1872 


367,396 


284,197,430 




4,262,961 45 


13.544,000 


1873 




312,072,995 


27,875,565 


5,617,313 91 


13,478,000 


1874 


395,408 


303,705,140 




5,466,692 54 


13,456,000 


1875 


. . . 


*I 73,764,246 






5,108,981 40 


13,457.000 


1876 


407,661 


*i68,037,i78 






4,046,805 80 


13,436,000 


1877 




* 1 48,400, 148 






4,013,410 44 


13,364,000 


1878 


436,731 


*i3i,98i,436 






3,778,856 80 


13,057,000 


1879 




*ii7,970,i35 






3,776,888 19 


13,043,000 


1880 


503,298 


*i 17,133,643 






3,899,126 98 


12,752,000 


I88I 




*ii9,i5i,95i 






4,136,608 38 


12,752,000 


1882 


560,693 


*i25, 358,537 






4,227,402 98 


12,752,000 


1883 




*i33,23o,504 






4,540,506 13 


12,751,500 


1884 


629,985 


*i37, 326,980 






4,872,456 60 


12,751,500 


i88s 




* 1 39,958,292 






5,152,366 03 


12,695,500 


1886 


693,861 


*i58,496,i32 






5,368,409 76 


12,588,500 


1887 




*i6i,204,535 




5,602,712 56 


12,588,500 



* Equalized Valuations of State Board of Equalization. 



490 



S TA TIS TICAL INFORM A TION. 



Cincin?iati} 

Population by census of i860, 161,044; by census of 
1870, 218,900; by census of 1880, 255,208. 



YEAR. 


REAL ESTATE. 


PERSONAL 
ESTATE. 


TOTAL 
VALUATION. 


RATE OF TAX 
PER $1,000. 


1867 . . 


^68,569,040 


^68,412,285 


^136,981,325 


^27.40 


1868 




69,799,604 


61,583,925 


131,383,529 


28.00 


1869 




72,243,844 


58,471,666 


130,715,510 


31.90 


1870 




78,736,482 


57,370,754 


136,107,236 


31.60 


I87I 




123,427,888 


59,934,044 


180,361,932 


22.20 


1872 




119,621,856 


55,462,410 


175,084,266 


20.10 


1873 




121,479,280 


64,166,460 


185,645,740 


23.06 


1874 




123,231,790 


58,718,284 


181,950,074 


23-38 


1875 




125,976,835 


58,521,730 


184,498,565 


24.82 


1876 




127,143,900 


56,809,066 


183,952,966 


27.04 


1877 




128,820,270 


50,609,872 


179,430,142 


29.10 


1878 




129,043,880 


43,830,188 


172,874,068 


28.54 


1879 




128,473,130 


40,832,505 


169,305,635 


28.98 


1880 




129,956,980 


37,578,376 


167,535^356 


31.00 


I88I 




120,045,230 


41,359,162 


161,404,393 


22.20 


1882 




121,897,090 


45,089,015 


166,986,105 


23.82 


1883 




122,874,790 


47,050,496 


169,925,286 


20.50 


1884 




124,625,370 


44,908,822 


169,534,192 


25-56 


1885 




127,454,100 


42,632,868 


I 70,086,968 


26.86 


1886 


• 


129,378,370 


42,571,661 


171^950,031 


25-44 



1 Tables concerning Cincinnati taken from Auditor's Report, Boston, 1886-87. 



REVENUES AND EXPENDITURES. 



491 



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492 STATISTICAL INFORMATION, 

New York. 

The City's Taxes and Expenses, Past and Present.^ 

The great advance in the assessed valuation of property 
in New York City since The Record and Guide first saw the 
light is a matter of local history. It is interesting, however, 
to glance at the figures for the past twenty years and to 
institute comparisons. The assessed valuation since 1868 
shows an increase of ^699,825,134, equal to 77 per cent. 
The tax levy during the same period has increased about 34 
per cent., and the city's running expenses over 32 per cent. 
It would seem, therefore, that these have not kept pace with 
the increase in population, but that they have decreased as 
the inhabitants became more numerous. The population in 
the summer of 1868 was about 875,000, and at the same 
time of the year in 1887 it may be estimated to have been 
about 1,575,000, showing an increase of 700,000, or 80 per 
cent. Had the expenditure increased in the same propor- 
tion, the city's expenses would have been $48,000,000, 
instead of about $34,000,000. Again, in 1868 the appro- 
priation for the administration of the city government was 
$29.59 per head, while in 1887 it was $22.71. The tax levy 
during the same period has increased 34 per cent., or 46 
per cent, less than the advance in population. A curious 
matter of note is that although the population and real 
estate of the city have increased so largely during the two 
decades, the assessed valuation of property per capita in 
1868 was $1037.53, while in 1887 it was but $957-23- 
This is due, of course, to the population increasing in a 
slightly greater ratio than the value of the property, though 
it will be observed that there is only a difference of $80 per 

1 From The Record and Guide, of New York, March 24, 1888. 



REVENUES AND EXPENDITURES. 



493 



capita, showing that the value of property has advanced in 
about the same proportion as the increase in population. 
The following are the figures : — 



YEARS. 


TOTAL APPROPRI- 
ATIONS. 


TAX 

RATE. 


TOTAL VALUATION. 


TOTAL TAX 
LEVY. 


1868 . . 


^25,895,659 02 


2.66 


^907,815,529 


^24,147,893 02 


1869 






23,689,536 34 


2.27 


965,326,614 


21,912,914 00 


1870 






23,072,556 47 


2.25 


1,047,388,449 


23,566,240 10 


I87I 






23,362,527 62 


2.17 


1,076,253,633 


23,362,527 62 


1872 






34,036,29051 


2.90 


1,104,074,537 


32,036,290 51 


1873 






30,154,187 77 


2.50 


1,129,139,623 


28,228,490 57 


1874 






34,872,391 79 


2.80 


1,154,029,176 


32,312,816 92 


1875 






36,171,472 23 


2.94 


1,100,943,699 


32,367,744 75 


1876 






34,934,801 26 


2.80 


1,111,054,343 


31,109,521 60 


1877 






30,984,269 48 


2.65 


1,101,092,093 


29,178,940 46 


1878 






30,079,077 12 


2-55 


1,098,387,775 


28,008,888 26 


1879 






30,247,750 20 


2.58 


1,094,069,335 


28,226,988 84 


1880 






29,667,991 98 


2.53 


1,143,765,727 


28,937,272 90 


I88I 






31,759,205 14 


2.62 


1,185,948,099 


31,071,840 19 


1882 






29,434,031 36 


2.25 


1,233,476,398 


27,684,427 26 


1883 






30,676,785 79 


2.29 


1,276,677,164 


29,167,029 81 


1884 






34,067,585 51 


2.25 


1,338,298,343 


29,991,17285 


1885 






34,678,405 41 


2.40 


1,371,117,003 


32,853,528 84 


1886 






33,802,320 59 


2.29 


1,420,968,286 


32,421,550 15 


1887 






34,343,022 55 


2.16 


1,507,640,663 


32,370,696 78 



494 



S TA TIS TICAL INFORM A TION. 



Philadelphia} 

Population by census of i860, 565,529 ; by census of 
;870, 674,022 ; by census of 1880, 846,980. 











RATE TAX 


YEAR. 


REAL ESTATE. 2 


PERSONAL ESTATE. 


TOTAL VALUATION. 


PER $1,000. 


1868 


$445,563,317 


$7,954,169 


$453,517,486 


$14 00 


1869 


454,196,370 


7,862,257 


462,058,627 


18 00 


1870 


471,600,265 


8,176,378 


479,776,643 


18 00 


I87I 


491,844,096 


8,592,786 


500,436,882 


18 00 


1872 


502,415,863 


8,608,819 


511,024,682 


20 80 


1873 


518,234,568 


8,930,700 


527,165,268 


21 50 


1874 


539,003,602 


9,239,933 


548,243,535 


22 00 


1875 


565,819,095 


9,464,873 


575,283,968 


21 50 


1876 


585,408,705 


10,004,673 


595,413,378 


21 50 


1877 


593.3I3-532 


9,755,000 


603,068,532 


22 50 


1878 


577,548,328 


9,439,769 


586,988,097 


21 50 


1879 


526,539,972 


8,069,892 


534,609,864 


20 50 


1880 


529,169,382 


7,498,452 


536,667,834 


22 00 


I88I 


535,805,744 


7,863,38s 


543,669,129 


19 50 


1882 


545,608,579 


8,166,650 


553,775,229 


19 00 


1883 


562,687,555 


8,795,700 


571,483,255 


18 50 


1884 


573,728,105 


9,884,578 


583,612,683 


18 50 


1885 


587,749,828 


10,035,600 


597,785,428 


18 50 


1886 


601,001,971 


10,307,644 


611,309,615 


18 50 


1887 


618,059,987 


10,619,325 


628,679,312 


18 50 



1 From Boston Auditor's Report, 1886-87. 

2 In 1868 real estate, which had previously been assessed at a nominal valuation, 
was placed at the full market value, and assessments have since been made upon that 
basis. 



REVENUES AND EXPENDITURES. 



495 



Providence} 

Population by census of i860, 50,666; census of 1865, 
54,595 ; census of 1870, 68,904; census of 1875, 100,675 'y 
census of 1880, 104,850; census of 1885, 118,070. 



YEAR. 


REAL 
ESTATE. 


PERSONAL 

ESTATE. 


TOTAL 

VALUATION. 


TOTAL TAX. 


RATE OF 
TAX PER 
$1,000. 


1867 


$45,027,200 


$40,017,200 


$85,044,400 


$918,480 


$10 80 


18682 


49,107,900 


43,618,100 


92,726,000 


1,112,712 


12 00 


1869 


50,909,800 


42,179,100 


93,088,900 


1,135.685 


12 20 


1870 


52,511,800 


40,565,100 


93.076,900 


1.256,538 


13 50 


1871 


64,995,800 


39,565,700 


104,561,50c 


1,411,580 


13 50 


1872 


69,926,400 


40,160,700 


110,087,100 


1,486,176 


13 50 


1873 


71,037,500 


41,443,900 


112,481,400 


1,518,499 


13 50 


18743 


81,040,300 


42,642,500 


123,682,800 


I.793.4OI 


14 50 


1875 


82,862,900 


39,091,800 


121,954,700 


1.768,343 


14 50 


1876 


84,981,000 


36,084,200 


121,065,200 


1.755.445 


14 50 


1877 


85,789,800 


32,085,000 


117,874,800 


1,709,185 


14 50 


1878 


86,341,100 


30,699,400 


I I 7,040,500 


1,697,087 


14 50 


1879 


86,816,100 


28,765,600 


115,581,700 


1,618,144 


14 00 


1880 


88,012,100 


27,908,900 


115,921,000 


1.564.933 


13 50 


1881 


87,788,000 


28,413,800 


116,201,800 


1,626,825 


14 00 


1882 


88,987,900 


30,208,300 


119,196,200 


1.728,345 


14 50 


1883 


90,143,400 


31,722,000 


121,865,400 


1,767,048 


14 50 


1884 


91,642,100 


30,854,400 


122,496,500 


1,776,199 


14 50 


1885 


92,887,400 


31,314,600 


124,202,000 


1,800,929 


14 50 


1886 


97.975.900 


32,281,500 


130,257,400 


1,823,604 


14 00 



1 From Boston Auditor's Report, 1886-87. 

2 Ninth ward annexed. 
5 Tenth ward annexed. 



IV. 



RATES OF TAXATION.i 



I. TABLE SHOWING RATE OF TAXATION IN CENTS PER ^lOO, IN THE 
VARIOUS STATES FOR iSS?,^ 



Alabama 55 

Arkansas 40 

California .' 56 

Colorado 55 

Connecticut i2i^ 

Delaware 2 — 

Florida 40 

Georgia 35 

Illinois 35 

Indiana 12 

Iowa 25 

Kansas 41 

Kentucky 471 

Louisiana 60 

Maine 27! 

Marj'land 17^ 

Massachusetts 8|- 

Michigan I2| 

Minnesota 13 



Mississippi 35 

Missouri 40 

Nebraska 81^ 

Nevada 90 

New Hampshire .... 19 

New Jersey ^5to 

New York 27 

North Carolina .... 37!- 

Ohio 29 

Oregon 31 

Pennsylvania 30 

Rhode Island 12 

South Carolina .... a.2^ 

Tennessee 30 

Texas 37I 

Vermont 10 

Virginia 40 

West Virginia 35 

Wisconsin 15I 



^ The reader should not attribute too much significance to these rates. A rate of 
18 cents on the $100 in one state may be really a higher rate of taxation than a 
rate of 25 cents in another state. It depends upon the way property is valued. I 
have no doubt that our Baltimore rate of taxation for state and city of $2.07! is 
higher than $2.18 in New York City, because the Baltimore assessed valuation is so 
much nearer the true valuation. 

2 The rate, as found in the latest report received, has been given, in most instances 
for 1887. If the above are not consistent with the preceding detailed statements, it is 
because later reports have been found regarding this point. 

3 There is no state tax on property. 



RATES OF TAXATION. 



497 



2. SCHEDULE SHOWING THE RATE OF STATE TAX ON EACH DOLLAR 
OF THE AGGREGATE VALUATIONS OF PROPERTY FROM 1 8x6 TO 1 887, 
INCLUSIVE, IN THE STATE OF NEW YORK.l 









MILLS 










MILLS 








MILLS 


1816 .... 2 


1850 .... \ 


1869 . . . . 5f 


1817 . 






. 2 


185I 








\ 


1870 






. 7tV^ 


1818 . 






• 3 


1852 








\ 


1871 






• 5t¥^ 


1819 . 






I 


1853 








I 


1872 






• 9l 


1820 . 






I 


1854 








1 


1873 






. 6r¥a 


182I . 






I 


1855 . 








li 


1874 






. 7i 


1822 . 






I 


1856 








If 


1875 






. 6 


1823 . 






I 


1857 








3 


1876 






.3M 


1824 . 






I 


1858 








2i 


1877 






■zl 


1825 . 






\ 


1859 








2|- 


1878 






.2^ 


1826 . 






\ 


i860 








3f 


1879 






. ^m-, 


1842 . 






I 


1861 








38 


1880 






• z\ 


1843 . 






I 


1862 








4| 


1881 






. 2i 


1844 . 






ItV 


1863 










1882 






. 2tVo 


1845 . 






T^O 


1864 








5i 


1883 






• 3l 


1846 . 






tV 


1865 








4|f 


1884 






•2ff 


1847 . 






\ 


1866 








5t^. 


1885 








1848 . 






\ 


1867 








71 


1886 






• 2AV 


1849 . 






\ 


1868 . 








5f 


1887 






.2xV 



1 From Comptroller's Report for 



VALUATIONS OF REAL AND PERSONAL PROPERTY. 

I . TABLE 

Showing the proportions which real and personal property bear to 
the total assessed valuation in the United States and in each oj 
the geographical sections^ 





REAL ESTATE. 


PERSONAL 
PROPERTY. 


AGGREGATE. 


United States . . 


77-13 


22.87 


100 


New England States 


71-50 


28.50 


100 


Middle States . . 


86.60 


13.40 


100 


Southern States . . 


70.77 


29.23 


100 


Western States . . 


74.09 


25-91 


100 


Territories . . . 


46.81 


53-19 


100 



1 Census Report for 1880. Volume VII., page 17. 



VAL UA TION OF PR OPER T Y. 



499 



2. TABLE 

Showing assessed valuation of real estate and personal property in 
the years i860, i8yo, iSSo, together zuith percentage of increase 
and decrease)- 











^ 




J 








W 


< 


"^ 


^ 2 


YEAR. 


ASSESSED VALUA- 
TION OF 


ASSESSED VALUA- 
TION OF 


P 


Sz 


< w 


g > ^ 




REAL ESTATE. 


PERSONAL FROP- 


z 2 . 


z^^ 


z z . 


zS^ 








5^^ 


[>•; z 


5r U Ca 

S H < 


i^§ 










cs w 












E- > 


J £ H 


h > 


J a. H 








percent. 


per cent. 


percent. 




i860 


^6,973,006,049 


^5.111.553,956 








... 


1870 


9,914,780,825 


4,264,205,907 


42 


16 




... 


1880 


13,036,766,925 


3,866,226,618 


31 


9 


87 


24 



1 Taken from the Census Report for 1880. Volume VII., page 9. 



500 



ST A TISTICAL INFORMA TION. 







<rirt o o 


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01 


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un ONOO 00 ON On 




M 


o'md vo" '^ d^ 


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t^ tC d^ CA d^ d^vo 


c 




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On ^ O O 00 


'd- uooo t--oo« u-^r--o OlvO 


On 


^. 


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oo 


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u^ 


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f^ 9 


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OnOI ONi-1 Onw 01 lor^OlOO 


ro "^t Tf M O Lo 


a. ph 




^ ro «- CO On 


1-1 On "1 00 O LnOO oOvO 


01 


t^OO 


Lo ro u-> ro 




=95= 




N « M 




'^ 










0000 loi^^t^ONNH i-( oonm Onoo r^ n 


m 01 


•^ 


HI O 01 lO 


^ 




O 00 00 On^O 


rDLOTj-Lnm-Ti-T:hO ON':^ 




r^oo 00 ro w r^ 




O rn i-o H- 


N 


t-^i-iONOOiroOONOloi 


C7; O 00 


r^ Lo HH CO 


\L 




^ ^ ». - 














< 




rf o <^ -^ 




0) u-)ro«-H 0OT+-01 uoOl^O 


oT 


O 




vO On LO ro 


^ 


c§ 


r^^ t-^ O 


ON O 00 00 -^00 LO rOOO nO lo '^^O O 


'^vo 00 r-^ 


W 


ro r-. (N^-O^ 


r-- 


rDOO On TfvO 01 -"^ O m)00 


■^ 


l-c 


00 


^ t; <^o. 




















J 


M 


t-^ LO^O i-OOO 


O 00 ON UOOO r-.CO Lo 01 rooo 


l-l 


01 


ro ds n" LO 


< 




r^ LovO ro N 


LTji-c ooj>»roONOvO 01 r->vO 




oo O t^OO LO 






=^ ^ 


«N 


i-iu-iLOMi-iOli-ii-i 


oo 


-" 


tJ- 01 ro 






Alabama . . 
Arkansas . 
California . 
Colorado 
Connecticut, 
Delaware . 
Florida . . 
Georgia . . 
Illinois . . 
Indiana . . 
Iowa . . . 
Kansas . . 
Kentucky . 
Louisiana . 
Maine . . 


Maryland . 
Massachusetts 
Michigan . 
Minnesota . 
Mississippi . 
Missouri . . 
Nebraska . 



VALUATION OF PROPERTY. 



501 



t^ t~^ ^ rh rooo Ti-u-iONu-)ON>-i ^^ fON ^ 
O Lo O '-I roNO ON"- i-oo) r^ONO M Loio 
0<^uriroNO_^t>."-^NO_^qNLoiO"^'^o t->.r^n 
O" of o" On ■^ no" Oo" nD" o' o" On N cT oT rf uo 
-;h C^ LO rO '^ r~-.00 ►^ r<-)HH o '-' On-^^OO 
Tf i-H^ C^ — ^ t^nO « O LOOO 0^ "^ « ro u-i O 
vo'oo" ro >-r cnToo" t^ « OO" 'T? tF o" r^ O^ C?. ro 
CN| 1-1 r^NO o 00 i>«no cn) m n lOLoroLoO 
csu-i-^r^NO i-iroi-iC^NOMro>-iLo 

CO m" CO 


O -1 On « ro 
t^ w NO ionO 
VO^ !>. ^^ <^ ^ 

On CnJ ■ OnnO no 
1>»00 ' O '^^ 
O !">• NO >J^ <-o 


nonuo'^ r^cocoTt 

NO NO rj- 1-1 OnnO 01 nD 

^ '^ "1 '^ V? ^ '^.^ '^.. 

' tF oT rC o" ■ t^ cooo" CO 

■ 1-. t^O On ■ 01 t^NO 1-1 

* 00 oo 00 !>. ■ onoo^ !>-• r^ 
CO rF -"^ ^ d^ « oT tF 

NO 00 '^ 0< TtOO '^ O 


ro Td- « 00 O 
Looo^ C^_ ro r-» 

OnOcT ■ On fONO" 

1-1 ro 1-1 oj r^ 


cOOO^o u-^OOnO 
LO OnOO no no no 01 On 
.-.►-fOM NOt^LTlO 

• oToo" cooo" • tFoo'no" oT 

OlO'^hh 'NONDTtt^ 
OI^nO^ O; ►-^ ' ^., ^ '^ '"C? 

i>l CO oT o" t-^ r^No"o6~ 
ON 'too O O "^ ►- ON 
NO 01 01 i-( M 1-1 CO 


On w 1-1 NO N 00 'vI-nO CO loOO lo u^ lo uo « 
moo NOOOOOO-t^rorOwr^roOLO 
•tJ- 1-1 CD O CN) i-o O O NO 1-1 >-o Lo t^>. 1-1 r^ t^ 

i-T Lood" o" o" o" oT onno" cToo" •^no" lo of ^ 

ONU-i-H rfONO N lO rONO r-^NO O lo 01 t^ 
C^l>>u-)ON>-«^ro^"^'-C?'^'^r '^'y~^^ •^nO On 

cf^ -^ m" i-T^o" tF m" CO oT ro ^"^ d'No'od" Onoo" 
C< NO r^ u-1 un ro looo Loro-< NOO O roro 
w lo^o wui NO^(N>-iCSro roi-1-^ 
oT i-T i-T 


On !>• fO t^NO rOOO 0\ '^ "^00 « C^ nO On O 
(N u-)C< -^r^O 1-1 ij^«nO rnONLorOONfO 
Tf O i>-no^00 oO"-^O^N T^roLO" Loroo 
O" oT Lo rC O" c^" t^ — " oT 0<r -^ LT) o" ro oT ro 
LO 0) 00 u-5 OnOO rou-i— ONrOLOt^LONOO 
roq_00NO rONO On 's^ ro O « 00 rooo nO « 

w" rf c> oT tF O" C?^ ro tFno" no'~ '^ lO ^ '^F '^F 
w ^ N <S LO Tt « '^nO lo 1-1 >-< 1-1 t^ m On 
1-1 ro -^ •-< w 


O -^00 OvNO u-iNO r^ O O O ^ fO OnnO w 
COO) COLON OnO voLor^o 0) 0) OnO M 
0^'-^N0_^cocot-^0NON'^N0 N OnnO Locot^ 

w" CO d cf o^ t^ Tt tC tF „" tFoo'^no" i-T d'oo" 

Tt CO cooo O 1^00 O mnO -to <^0 OOO 
On r-.ND_^ N r^NO^ un o^ N ^^vo lo ^hNO O t^ 

tCoTN ON-TcOCNrCDOcTt^LOLOi-rcOLOTF 

1-1 0< tJ- N On CO T^OO t^ ON O t^ CO O '^ 

wri-cOi-iO iJ-li-i HHCNl C^wCO 

oT «" i-T 


Nevada . 
N. Hampshire 
New Jersey . 
New York . 
No. Carolina 
Ohio . . . 
Oregon . . 
Pennsylvania 
Rhode Island 
So. Carolina 
Tennessee . 
Texas . . . 
Vermont . 
Virginia . 
West Virginia 
Wisconsin . 









Oj=__ 

o. Mis ■«".,*-' 

JZ ^ P. J w" S 

«^ il s^ 

2 G ■- c ^-^ 
«-y o ° n n 






c o ^ 
o s c^ 

= - o « ^ ^ 

O ti (i; <— -C — , 



; « ^ a o^re to, 
'^ c— ■{; '* <u 

:rii|l| 



fc.J=.= o 









— o 

^ " >>*- >i « c 

G-^ D • S « = Si 

o <u 2 c a'— u M 

-ipf 0.2 £ >.-Q « 



rt ^ 

S-a 






J*' 

^ ^ ;/) :;;^ « c^^ 



M o E 



o ON ; 



"t: M u "-.o 



> £ S 
o H.2 
^ (U rt 



Ji -So ^ u ii. 



502 



S TA TIS TICAL INFORM A TION. 



In some states the valuation of railroad property is given 
separately, and is not included in the above aggregate valua- 
tion for 1887. In 1880 the railroad property seems to be 
included. The separate valuations of railroad property are 



given as 


tol 


lo\ 


^S 


— 






Alabama . . . 


^22,296,870 


Nebraska . . . 


$23,601,362 


Arkansas 








13,704,639 


New Hampshire 


13,536,711 


Georgia 








22,981,927 


Nevada . . . 


9,212,451 


Illinois 








62,972,101 


North Carolina 


7,075,252 


Iowa . 








38,722,761 


South Carolina. 


16,263,822 


Kansas 








32,453,776 


Tennessee . . 


. 31,547,582 


Kentucky 








33,722,621 


Virginia . . . 


. 35,700,515 


Missouri 








42,847,264 


West Virginia . 


• 14,488,758 



In order to determine the full valuation the above sums 
must be added to the totals of real and personal property as 
given in the table. In states where railroad property is not 
given separately it is included in the totals of real and per- 
sonal property. 



VALUATION OF PROPERTY. 



503 



Id 

< 
H 


1) 
> 


00 r^ N moo O Th ONOO O O O oo -to vn -^ o oo OM^ On 
ro'"OO^JfS^<OOCr\ LOO nco CN'd-LOLO— Tt-T;f"-00 
M C^00 u-iO CnO t^ On <^0^ '^ """i? "^ '"^ '^ ^ ^ '^ ^^ '"L 'II 

Lo c^oo~ r^oo" r^ c^T o' <^ d^ oT "n" ►-'" r<^ r<o of :js c> -^ CA cT ro 
O Lo lo C "-' O ONOO O '^ -^ r^O Lo 01 vO CJ ro « u->00 ro 
uo .^^ M -.^ r^oo "^ " ^ "-C" ^ "^ ""^ Q. O, '^^ "^^ O, ^ 'v^-^- 


6 


NvO N t^Loro^or^O^ O *-* 0\ ^ MOO r^ tj-O -^ O 
OnOOOO O LO'^r^OOO --^^t^ro-i r-- u-^co HH OJ LO c^ 
O O '^00 '>-'^'^^„0^'"„^^'^'^"^"^<^'-^'^^ TfC^ 
«cRrnNOo'o'~t^rO'^t^t^«'~d~'^roi>lt-^Tfu^u^roa^ 
OOO O-^'^f^-OOOO'^ "^-^ OO On O ON On 1>»0 O lo 


i 


> 


N OnOnI^'^'^^'^'-OloO *-■ O N ChOO rooo 1^ ►- O "-1 
■^O C^-iO rO'^CSOOCO OOO M u-iwcx) iJit^M OnO lo 
t^ ("O ro O^ <^ LO -sf -^ '^ 1-^ GO^ 0O^O0__ !>. r^ M ro M 00 t^ ^^ O^ 
"-T t-^ ro oT "^ CnOcTo" o" oT ro h^ t-^ ^ ro r^OO t-^00~ cTod" 0~ 
■^04 O ro t^ O ON >-00 <N O -^ O LO I-^OO ro O ^J ^ OnOO 


i 


0\ rOO O OO rOLOLOONON OnOO (D O 00 loOO 01 t^ - lo 

^ « OnCO^ ■* '^ 1 "^ '^^ '^ 9. <^ "^^ ^ "^ ^^ 't '^°°.'^- ^ ""- 

t^ ro'o'od' o" ^^^ oTo" Looo o"o" Loo'od" d\ o ^ d^ o^ ^ o^ 

rO'^'^'^LOLOU-iLril-OLOLOLOLOlOLO LOO O LO LOO LO 


on 
W 

i 

s 


J 
> 


ro r^OO ON « w t:!- i-i OD r^oO fOO t-- oO t-~ 04 M t^O O lo 

O t^ ^ -^ Lo O 0) LoO O 00 u-i Lo O oo >-< r^o t-^ -i on ro 

q; q^O_^ ^ '^ '^ 0_0^ ro 04^ 04__00_^ O^O0_00__ t^ '^ LOOO^ t^O^ '^ 
i-T oT o" LO ^o" t-^ 04"c<r ro -rf O (5" cf\ Lo Lo 04" LoOO t^ cf\ 00 
0000 0400O « 04 miJ^'Tl-rOi-i r^f^i-cOO LOt^OlO on 

^ '^ ^^ "^'^0 0^^ r^r^rj-ON>-<^Tj-'^ t-^00 Lo '^oo^oo^ 
<S ro LoocT •-" rf o^od" >-^ oT fo oT o\ 04" i-T oT oT of looo oo" o\ 

04 04 04 04 fO0OrOrO-rl-Ti--^'^rO^Tt-rJ-Tj-Ti--^':d-^'^ 


^ 


ON mo 00 r-^ >-i 04 04 ro rOO >^ On co ON — rn 04 r-^O r^ ON 
-lOO mo t^« «0 0^00 OnOO 04 t^OO 00 04 00 

^ ^ "^^ 't "t *<? "- O- ^^ 't^^^'^^ 'l^^^ '-L '^- '^^ '^. "^ "^ '^^^ 
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-^0^ On "^OC^ J>^ On Tf OnOO m 04 -^tJ-OO aN'^m04^ °^^ 

0^00" 00 '^ t^ 0" «" cf^o" r^oo" m 0" 0" 0"^ t^ 0" t^ «" 0" ^4" tF 

i-H 04 LOOO LO04 -^ro^ J>-0\0 LOO 'sh ON ro O On O 
00 1-1 t^ M LO <T)00 ►- On i:^ r^ 1>- t^O lo On « OD r^-O '^ 
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NO NO t^-O t^O 000000000 LO LO 


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oT oT 04" oT 04" oT 04" oT 04"" oT oT 04" oT oT 04" 04" 04" C4'~ oT 04*" 04" oT 


1 

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On « 00 mco NO LO 04 m ^0 00 moooooo mo4 mLo 
0^ 04__ oa^o__ LO o_^ Looo^ « o_^ moo^ lo moo_^ ^ "^ ^ ^^ ^^^o^ « 
no" cT ^-^ Ttoo" m 1--" oT ^ao oT i-Tno" of >-r m loo*" i-T cT 04*" "^ 
t^ ONOO 'sh LO nO ■^o roo t^ 04 '^ "-' M mo 1-' 

q_ 1>» ro mo CO «-i Tf 04_^ OnOO On 04^ LO 0_^nO^ m t^ C O "^ 

L^o*" 04" ►-To'" 04" 00*" r^ m tC 04" 04" p-Too" u^ u^ t^ (5 -T i/i cfi -T 
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^^ 


6 


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mj LO LO r^o On >-• t^oo lo 04 tj-oo 00 on « m 

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ori-rLOf^i>l>-ri-rLo lono" vOONoTNo'm'^Lor^r^O'^Tf 
r^ I-< t^ 4>« t-^OO OOOOOOOOOOOOOO O OnOnOnONOnOnOnO 


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OOOnooo t-^r-~i>>i^r^t-^r^i>«r^ t-^oo 00 oo 00 oo oo 
oooooooooooooooooococooooooooooooooooooooooo 



504 



STATISTICAL INFORMATION. 



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t^OO OnvO P^ t^ m N ^O Tj-OO N On ^ On r^20 t--0 !>. 1>~ rn 
LOO t~-00 ON On O^ O^ O^ O^ O^ O^ On O^00 00 00 00 00 CO CX3 00 


6 


O Tf M N O O O OnnC roiOt-.M N rOi- OO ^iO« rh 
OO On O t^ - ^ On ^00 r^ ro rO t^ On On lt. a^00 '^ N ro « 
r-.oq W_ !>. uri lonO^ uT) i-._^0 I>. "^^ O LO r^ On "^OO "^ <^ i^^ 

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ntT On i-T 1^ ro O -"f 00 O COGO On i^ rO -^ On r^vo' no" o' n^T Ir^ 
On On »j-)nO O N ro ro lo 'sh lo t--0 ~ 00 r^O r^ >J-2 lo rO « 
u-inO r^ r^OO OOOOOOO^OOOOOnOnO u-)U^LnvotniOi/^vo 


6 


OnvO O mo O >-' OnOO O Te-NvO N rOTJ-l^.u-i-NO fOO 
1-1 ONrOJr^ONI>-t^i-< r^w M ro rovO •i tJ-wvOnO roON^o 
■-^ 't "-l ^^ '-1, ^ '-^ '^ "^ ^ '^^ "^ "-^ ^„ "^ ^^ *^^ ^ '"2'^ K?°^ 

roLr)'#Tr-<^f^prpro\Prroo\-<j- oiod t^ t^ r^o Lo lo Lo 


ii 


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r^ ^O M xr^ On ^ '^ N ONOO OOO « Tf^tN O rOO I>-0 
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N t^ rooo O loOnNnOnO -sfO OvOO O 01 ro lovO nO CO 00 
-<i-iMNrororororororoc>)Ni-(<SCS«««hH«H-i 


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i-H N rj- u-i vovO O t^ 00 00 00 00 r-^O^O^vO nO nO nO t^ r-^ !>- 


6 


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6 


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tF t^ pT ro OnOO o' i# cT 1>^ '^ t^ I-" t^od" lO t^ LO I>1 cT CO cf 
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nOnOnOnO^nO t^i>.t^r-t^r^t^l>-t^ t^OO 00 00 00 00 00 

OOOOOOOOOOOOOOOOOOOOOOOOCOOOOOOOOOOOOOCOOOOO 



VALUATION OF PROPERTY. 



505 



INVESTMENTS IN 
MECHANICAL 
AND MANFG. 
OPERATIONS. 


> 


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506 



ST A TIS TICAL INFORM A TION. 



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VALUATION OF PROPERTY. 507 



5. VALUATION OF PROPERTi" IN CHARLESTON.^ 

The assessed valuation of real estate for 1886 was ^16,933,- 
565; of personal property, ^7,809,212; total of real and 
personal, $24,742,777. 

The following personal property was returned for taxa- 
tion : — 

1543 horses and mules • ^128,885 

322 neat cattle 8,270 

1 127 gold and silver watches and plate 84,482 

554 piano-fortes, melodeons, and cabinet organs . 48,950 

443 carriages, buggies, etc 40,190 

1 136 wagons, drays, carts, etc 43j792 

774 dogs 7,740 

Merchandise, moneys, credits pertaining to business 

of merchants 2,182,237 

Materials, machinery, engines, tools, and fixtures of 

manufacturers 907,086 

Moneys, bank bills, and circulating notes on hand or 

deposit, and all credits 451,516 

Stocks and bonds of companies, corporations, and 
persons (exclusive of United States, state, and 
city), and receipts of insurance agencies . . .3,252,656 
Vessels, boats, and other floating property . . . 201,618 
All other property, including household furniture . 451,790 

Total $7,809,212 

^ From Charleston Year Book, 1886. 



508 



MISCELLANEOUS MATTER. 



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-lAOJd 3>|EUI 3UIH 3UIES 5E JSnUI 

iqap E 2UIJ83ID jtiqEdpiunui y 



-Oap ]Ep3dS E IE SJ3J0A JO 1U3SSB 

inoqjiAv' (^tiEJ0dui3i idaoxa) jqsp 
jDEJjiioD Xeui X5i[Edpiunui o^ 



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-|0j aqj SuTpaaoxa lunouiE ue oj 
sjqap 30EJJUOD ao paiqapui aq '3jeS 
-aiSSE aqi ui 'ueo AiijEdpiunui o^ 



•uopoap 
|Ei3uaS E IE 3|doad Xq paijijEj aq 
jsnui (auo uuin|OD ui se jdaoxa) 
iqap ajEis e Suizuoqine job uy 



•punj 

SUIJ^UTS E JOJ apEUI ST UOISIAOJjJ 



•piBd SI iqap aqi 
|uun pajBadaj aq 50u Xeui umn 
-joo guipaoajd ui oj pajjajaj me']; 



e ^"luauiAEd joj 
suoisiAOjd aJ^Eui aiuu atuES aqi 
JE IJEqs qoiqAV a\ej e Xq pazuoqjnE 
ssajun paiDEJjuoD aq ueo aqap o^ 



S u 



•;uaiuAEd loj apBui 
uoTSiAOJd puE 'a|doad Aq pay 
-TiBJ 'jpq m paypads Apouii 
-sip uaqM sasodind jaqjo jOjJ 



•jqap aiBjs j^Ed ojl 



•uoqpqaj 
ssajddns jo uoiseaui pdaj oj^ 



— 'siqap qons jaqio 
^|B qiiAV 'Suipaaoxa jou uboj Ajbj 
-oduiaj azTJoqjnE Abui 3JtnE[SiSaq 



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DEBTS OF STATES AND CITIES. 



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510 MISCELLANEOUS MATTER. 

2. ADDITIONAL CONSTITUTIONAL PROVISIONS REGARDING STATE 
AND MUNICIPAL DEBTS. 

Tejnporary Loajis. 

In Alabama no new loan can be negotiated until the old 
one is paid. 

A law authorizing a temporary loan must provide annual 
taxes sufficient to pay principal and interest : in Wisconsin 
in five years ; in Minnesota in ten years ; in Kansas when 
due ; in Missouri in two years. In Nebraska sufficient taxes 
must be laid to pay the interest. Such provisions, except 
in Missouri, are declared irrepealable. 

Other debts. 

In addition to those mentioned in the table, debts may in 
Colorado and Florida be contracted (but not to exceed 
^50,000 in Colorado) for the erection of pubUc buildings ; 
and also in the latter state for the support of state institu- 
tions or the completion of public works ; in Kansas debts 
may be contracted for public improvements, but not to 
exceed $1,000,000. 

In Maine the constitution authorizes a special war debt of 
$3,500,000. In Virginia, Arkansas, and South Carolina there 
are constitutional provisions forbidding the issuing of in- 
terest-bearing treasury warrants or scrip, — except in Vir- 
ginia, for redemption of bonds previously issued, and in 
South Carolina and Virginia, for such debts as are expressly 
authorized by the constitution. 

Payment of debts. 

As indicated above, provision must be made in most of 
the states for payment of debts when the debt is contracted. 



DEBTS OF STATES AXD CITIES. 511 

It is further obligatory that provision shall be made for the 
payment of the debt, principal and interest : when due, in 
Iowa, Minnesota, Kansas, Nebraska ; or within thirteen 
years, in Maine, Minnesota and Missouri ; within fifteen 
years, in Maryland, Missouri, and Colorado ; within eighteen 
years, in New York ; within twenty years, in Iowa, California, 
and Nevada ; within thirty years, in Kentucky ; and within 
thirty-five years, in New Jersey. In Illinois and North 
Carolina and South Carolina it is required that the payment 
of interest when due shall be made. 

Limitation of state's power to contract debts ; Rebellion debts. 

By the constitutions of Virginia, North Carohna, Georgia, 
and Mississippi, the state shall never assume, pay, etc., any 
debt incurred in aid of rebeUion against the United States, nor 
shall any tax in Virginia or North Carolina be levied for the 
purpose of aiding rebelKon against the state or the United 
States ; and in Florida all debts contracted by the state 
or its municipahties during the war, except for school pur- 
poses, are void, nor shall any such debt ever be paid in 
South Carolina ; and it is further required in the latter state 
that all debts must be by state bonds not under ^50 each, 
payable in twenty years. 

Repudiation. 

The constitutions of North Carolina, Missouri, Mississippi, 
and Arkansas provide for the repudiation of certain debts. 

MUNICIPAL DEBTS. 

Purposes. 

The constitutions of several states make the following 
restrictions upon municipahties, etc., in respect to the con- 



512 MISCELLANEOUS MATTER. 

traction of debts : No country, city, or village shall in 
New York contract debts except for county, city, and village 
purposes; in Colorado, except for making and repairing 
public roads and bridges, and for erecting public buildings. 
In Indiana no county can borrow money for the purchase 
of stock in any private corporation. No county, city, or 
other municipality can issue interest-bearing evidences of 
indebtedness, except in payment of debts previously (1874) 
existing in Kansas ; in Texas, counties or cities bordering 
on the Gulf may levy taxes and issue loans for the erection 
of sea-walls, breakwaters and for sanitary purposes. In Col- 
orado, school districts may contract a loan upon majority 
vote of the tax-payers therein. A constitutional provision 
concerning counties in Maryland has already been noticed 
under " Loans of Credit." 

Amount. 

No county in Oregon shall create debts to exceed $5000. 
Debts in excess of above limitations may be contracted 
under certain circumstances : in Oregon, to repel inva- 
sion or suppress insurrection ; or in Indiana, to provide 
for the protection of the people in time of war or great 
public calamity, on the petition of a majority of the property- 
owners ; or in Missouri, to erect a court house or jail ; or in 
New York and Colorado, to supply water to the city or 
town. But in Colorado counties may incur debt to a 
greater amount than as above limited by a majority vote of 
the tax-payers in such county, but only to double such 
amount. 

Faymejtt 

A municipality creating a debt, must at the same time 
make provision for the payment of the same, princi))al and 



DEBTS OF STATES AND CITIES. 



513 



interest, either by a tax or sinking fund, within twenty years 
in IlHnois, Wisconsin, Missouri, CaHfornia ; within fifteen 
years in Colorado ^ within thirty years in Pennsylvania, New 
York, and Georgia ; and within thirty-four years in West 
Virginia. In Texas the sinking fund must be of two per 
cent, annually. 

3. BONDED DEBTS OF STATES AND CITIES.^ 









BONDED DEBTS 


BONDED DEBTS 


STATES. 


STATE 

BONDED 

DEBT. 


STATE 

BONDED 
DEBT. 


OF CITIES AND 

TOWNS, ETC., 
HAVING 7,500 

OR MORE 
INHABITANTS. 


OF CITIES, 

TOWNS, ETC., 

HAVING LESS 

THAN 7,500 

INHABITANTS. 




1887.2 


1880.3 


1880. 


1880. 


Alabama . . . 


$9,193,900 


$9,008,000 


$3,492,500 


$425,700 


Arkansas . 






5,108,043 


2,813,500 


178,694 


361,733 


California . 






2,698,000 


3,403,000 


7,055,115 


398,250 


Colorado . 






none 




16,000 


342,150 


Connecticut 






4,270,000 


4,967,600 


12,848,054 


2,582,200 


Delaware . 






465,000 


880,750 


1,372,450 


44,100 


Florida 






1,275,000 


1,280,500 


266,497 


760,786 


Georgia . 






8,733,500 


9,951,500 


8,927,800 


668,725 


Illinois 






none 




18,590,680 


2,452,752 


Indiana . 






6,430,608 


4,998,178 


6,958,700 


1,871,429 


Iowa . . 






245,435 


370,435 


3,091,959 


584,303 


Kansas 






815,000 


1,181,975 


1,839,813 


955,709 


Kentucky . 






694,000 


1,858,008 


10,321,500 


783,316 


Louisiana 






11,982,621 


22,430,800 


15,655,499 


96,000 


Maine . . 






3,959,000 


5,848,900 


12,402,450 


3,650,353 


Maryland . 






10,960,535 


11,277,111 


21,158,375 


43,575 


Massachusett 






31,429,680 


33,020,464 


73,696,019 


3,092,465 


Michigan . 






241,993 


905,150 


5,546,045 


837,356 


Minnesota 






3,964,000 


2,565,000 


2,991,911 


686,387 


Mississippi 






3,752,904 


379,485 


373,218 


94,246 


Missouri . 






10,527,000 


16,259,000 


25,666,449 


1,280,059 


Nebraska . 






449,267 


499,267 


428,535 


213,465 


Nevada . 






541,000 


56,400 


I I 2,000 


20,000 



514 MISCELLAXEOUS MATTER. 

DEBTS OF STATES -\XD CITIES. — Continued. 









BONDED DEBTS 


BONTJED DEBTS 


STATES. 


STATE 
BONUED 

DEBT. 


STATE 

BONDED 

DEBT. 


OF CITIES AND 
TOWNS, ETC., 
HAVING 7,500 

OR MORE 
INHABITANTS. 


OF CITIES, 

TOWNS, ETC., 

HAVING LESS 

THAN 7,500 

INHABITANTS. 




1887. 


1880. 


1880. 


1880. 


New Hampshire 


$2,912,600 


$3,501,100 


$2,952,400 


$1,663,759 


New Jersey . . 


1,496,300 


1,896,300 


38,648,850 


2,795,654 


New York . . 


7,444,310 


8,988,360 


208,536,882 


2,184,102 


North Carolina . 


13,179,045 


5,006,616 


697,900 


248,656 


Ohio .... 


3,845,229 


6,476,805 


40,683,526 


1,926,285 


Oregon . . . 


110,000 


356,508 


76,500 


10,000 


Pennsylvania . 


15,692,600 


21,561,990 


95,445,234 


2,804,012 


Rhode Island . 


1,341,000 


2,534,500 


11,424,750 


116,000 


South Carolina . 


6,122,928 


6,639,171 


5,380,301 


124,255 


Tennessee . . 


11,412,900 


20,991,700 


4,433,400 


353,834 


Texas .... 


4,237>73o 


5,566,928 


3,141,662 


261,731 


Verraont . . . 


none 


4,000 


607,900 


2,606,963 


Virginia . . . 


29,095^967 


29,345>226 


10,707,177 


866,666 


West Virginia . 


none 




506,500 


394,100 


Wisconsin . . 


2,252,000 


11,000 


3,683,651 


3,343,583 


Total of States 


216,879,095 


246,835,027 


681,616,460 


41,945,259 



1 It must be remembered that the debts of both states and cities are really smaller 
than they appear to be. I suppose all of the property belonging to states and cities 
would far more than equal the debt, and the productive property owned by states 
and cities is in the aggregate worth a large sum. Sinking funds are becoming uni- 
versal, and these often hold a large part of the nominal debt, and sometimes all of it. 
Other funds, educational trust funds and the like, own state and city bonds. Iowa, 
Wisconsin, and California practically owe nothing, although they stand in the reports 
among states with debts. The sinking fund of Kentucky exceeds the amount 
of the debt. The newspapers recently reported that Texas has a surplus of three 
millions of dollars. The debts of all the states may be regarded as comparatively 
very small. Many cities are getting out of debt I suppose the productive prop- 
ert>^ of Baltimore City, if waterworks are included, is worth a great deal more than 
the debt. The city owns 32,^00 shares of Baltimore and Ohio stock, which for 
years paid ten per 'cent, dividends. It is said that the city practically owns the 
Wesfern Maryland Railroad. ' On this subject the statistics about revenues and ex- 
penditures already given should be consulted. 

2 In column one are given the state debts as found in the latest reports, for the 
most part on or about January i. 1887. The figures may not exactly agree with 
those in the detailed statements above, for the reason that returns for a later date 
than those of statistics there given have been received. Columns two, three, and 
four have been taken from the Census Report of 1880, Volume VII., page 755. 

3 The bonded debt of the counties in 18B0 amounted to $105,314,884; that of town- 
ships to $20,881,548. The floating debts of state. count\-, city, and township are not 
considerable in amount, and are not here taken into account. 



VII. 

INHERITANCE AND BEQUESTS. 

I. COMMENTS ON PROPOSED CHANGE IN THE STATUTES OF 
DESCENT AND WILLS IN ILLINOIS, SO AS TO INSURE A 
MORE GENERAL DIVISION OF PROPERTY AMONG THE 
PEOPLE. 

AT the meeting of the Ilhnois State Bar Association Jan- 
uary, 1886, the committee on law reform recommended, 
among other things, a most important change in the statutes 
of descent and wills, which we think ought to receive pro- 
found consideration. The recommendation is as follows : — 

" That the statutes of descent of property and of wills be 
so changed as to limit the amount that any one may take by 
descent from the same person or by bequest or devise, ex- 
cept for educational and other charitable purposes." 

The committee proceed to say that they would not recom- 
mend such a limitation as would carry the estate away from 
the kin of the decedent, or that would change the law as to 
the great majority of estates, but they would apply the limi- 
tation to those "abnormally large fortunes " which by being 
kept together as they may be as the law now stands " menace 
the political power of the state." 

The exact way in which such estates should be divided — 
that is, am.ong whom as heirs and in what proportions is not 
set forth. The committee seem to have thought it better to 
leave the details to the wisdom of the legislature. They do, 



516 MISCELLANEOUS MATTER. 

however, by way of example, tell us where the limitation 
might begin, and how it could be applied. They say that the 
amount a child might inherit might be limited to $500,000 ; 
those standing in the next degree of kinship $100,000 ; if 
there is more than enough to satisfy those in that degree the 
overplus to go to the next, with a like hmitation, and so on 
until the estate is exhausted. 

Suppose the estate to amount to $1,000,000 and that the 
decedent left one child, and brothers and sisters and other 
kinsmen ; the child would take $500,000, and the remaining 
$500,000 would go, first to the brothers and sisters, not ex- 
ceeding $100,000 to each, and if there remained a balance, 
that would go to those standing in the next degree of kin- 
ship to the decedent, with a like limitation, and so on until 
the whole estate is exhausted. If there are no heirs, or after 
paying off all who are entitled to share in the estate there 
still remains a balance, this may go to the state, or under the 
law as it now stands, in case there are no heirs capable of 
taking the estate of an intestate. 

The committee disavow any intention of a departure from 
the settled policy of the law of this country upon the subject 
in hand ; on the contrary, they insist that their " recommen- 
dation is in harmony with the spirit of our institutions, and in 
the same direction as the present laws against perpetuities, 
entailments, and of descent." 

That they are not agrarian or communistic in their sym- 
pathies is shown by the Hberality of their limitation. Those 
estates v/hich fall short of the limitation would not be 
affected. Half a million dollars ought to be a reasonably 
satisfactory fortune for a young man or young woman to 
begin with, and the other poor kinsmen would find life not 
unreasonably burdensom.e to whose store a hundred thou- 
sand dollars should be added by way of windfall. It is not 



INHERITANCES AND BEQUESTS. 517 

unlikely that the most serious apprehension which will be 
excited by the proposed reform will be, that if the legisla- 
ture once enters upon the poHcy of limiting the amount one 
may take by descent or will, that it will run to extremes. 
In our estimation, however, this fear is substantially ground- 
less. The conservative force of property itself will be amply 
sufficient to meet this danger. The greater danger is that 
the influence of property interest is so great as to render 
any reform in the direction suggested out of the question, 
except through the means of revolution. 

The report does not enter into an extended argument in 
support of the recommendation, but one of the points made 
is, that while the laws as they now stand were sufficient, in 
the days of slow accumulations, to counteract the tendency 
to mass the wealth of the country in few hands, that times 
have changed, and they no more have that effect. The 
report adds : — 

"There never was a time in the history of the world when 
the power of money in skilful hands was so great as the 
present ; or when the use of that power was made so con- 
spicuous. The new forces at its command are augmenting 
it with wonderful rapidity. Already the sceptre has passed 
from the sword to the counting-house. The fact that one 
individual may monopoHze hundreds of millions of the 
wealth of the nation and pass it at last by will to another, 
with all its possibilities, is a growing source of uneasiness 
among all classes of society. 

" It cannot be denied that in the proportion that the very 
rich are increased, so is the number of the very poor also 
increased, and the number of those comfortably off de- 
creased." 

After some discussion by members of the Bar Association 
present at the meeting, the subject was referred back to 



518 MISCELLANEOUS MATTER. 

Messrs. H. B. Hurd and James A. Connolly, members of 
the committee making the recommendation, with request 
that they report at the annual meeting of the association to 
be held at Springfield, January, 1887, giving more fully their 
reasons in support of the measure, and if they think proper, 
-presenting a draft of a bill in accordance with the recom- 
mendation. 

We shall look with interest for this report and the treat- 
ment it will receive at the hands of the members of the 
association. Lawyers are proverbially conservative, and it 
is not a little encouraging that so advanced a measure has 
been brought forward by them.^ 

At a meeting of the Bar Association of the State of 
Illinois, in January, 1887, Messrs. Harvey B. Hurd and 
James A. Connolly made a report on the laws governing in- 
heritance and bequests. From the abstract, as given in 
Jacobson's " Higher Ground," the following quotation is 
taken : — 

"As to whether the disposition of property upon the 
death of the owner was within the control of the legislative 
power of the state, it should be said that there never was 
a time in the history of the law when such disposition was 
not regulated by the state. No state, as far as known, had 
seen fit to impose any constitutional restriction upon the 
exercise of this power. Both in England and in this coun- 
try the power to dispose of property by will was the creature 
of the statute. The statutes of wills of the different states 
were almost as variant as the statutes of descent. There 
was no constitutional restriction upon the right of the 
legislature to make and change such laws to suit the wishes 
of the people, nor was there any vested right standing in 
the wa,y." 

1 Reprint from Chicago Law Ti?nes 



INHERITANCES AND BEQUESTS. 519 



2. BILL INTRODUCED INTO THE ILLINOIS LEGISLATURE TO 
REFORM STATUTES OF DESCENT AND WILLS. 

In the legislature of Illinois, session of 1887, the follow- 
ing, among other proceedings, were had : — 

HOUSE BILL, NO. 233. 
35th Assembly, Illinois. —January, 1887. 

Introduced by Mr. Collins's special committee, January 
28, 1887. 

First reading January 28, 1887, ordered printed and re- 
ferred to Committee on Judiciary. 

The Special Committee, to whom was referred the prepa- 
ration of a bill to restrict the amount any person or corpo- 
ration may take by descent or will from the same decedent, 
respectfully report the following bill : — 

W. H. Collins, Chairman. 

A Bill for an Act to restrict the Amount any Person or 
Corporation may take by Descent or Will from the same 
Decedent. 

Section i. Be if enacted by the People of the State of Illinois 
represented by the General Assembly, No person shall, by will 
or testament, devise or bequeath, either in trust or other- 
wise, more in value or amount, to the same person, than as 
follows, to wit : To his or her surviving wife or husband, not 
more than the sum or value of five hundred thousand dol- 
lars, or if the estate of decedent is in whole or in part in 
land, not more than fifteen hundred acres of land ; to a 
child of the testator, or of his or her wife or husband, or a 
legally adopted child, not more than the sum of five hun- 



520 MISCELLANEOUS MATTER. 

dred thousand dollars, or if the estate or decedent is in 
whole or in part in land, not more than fifteen hundred 
acres of land ; to the descendants of a child, in case of the 
death of the child, not more than by this section might be 
given to the child if she or he were living ; to any other 
person or corporation, not more than the sum or value of 
one hundred thousand dollars ; and any devise or bequest 
shall be vahd to such amount or value, and no m.ore. This 
section shall not apply to devises or bequests for educational 
or benevolent purposes. 

Sect. 2. No person shall be capable of taking by descent 
or distribution either of the real or personal estate of any 
person who shall die after the taking effect of this act, more 
in value and amount, as follows, to wit : A surviving hus- 
band, or wife, or child, or a descendant of a child when he 
can take directly and not by representation, not to exceed 
five hundred thousand dollars, or if estate of decedent is in 
whole or in part land, not more than fifteen hundred acres 
of land. The descendants of a child taking by representa- 
tion may take the same as the person he or she represents 
might have taken if he or she were living. No other person 
entitled to take by descent or distribution shall be capable 
of taking from the same decedent more than one hundred 
thousand dollars. When the estate is more than sufficient 
to give to the persons first entitled to take the full amount 
to which they are limited by this act, the balance, or so 
much thereof as may be sufficient to give to each of them 
the amount they may take under the limitations contained 
in this act, shall go to the kin of the deceased standing 
next in kinship after those first entitled to take under the 
laws of descent in their degree and their representatives. 
If there is more than sufficient to give to each of those 
standing in that degree of kinship and entitled to take the 



INHERITANCES AND BEQUESTS. 521 

amount he or she may take under this act, the balance, or 
so much thereof as may be sufficient to give to each of 
those the amount he or she may take under the Hmitations 
of this act, shall go to those standing in the next succeed- 
ing degree of kinship to the deceased and their represen- 
tatives. The like rule shall be applied to any surplus, so 
long as there shall be any, until the whole estate is divided 
among the kindred of the deceased, preferring those stand- 
ing nearest to the deceased, to the extent he or she may 
take under the limitations of this act. When there is not 
sufficient to give each of the persons standing in a certain 
degree of kinship and entitled to share the full amount 
he or she might take, such part of the estate shall be 
divided among them and those entitled to take by repre- 
sentation in equal shares, according to the rules of descent 
heretofore existing. If any balance remains after every 
person capable of taking the same shall have taken the 
amount or value he or she is entitled to take, the same 
shall escheat to the state, as in cases where there is no 
person capable of inheriting tlie estate. If in any case 
a person shall be entitled to take both by descent and 
by will from the same decedent, the aggregate in value or 
amount he or she may take shall not exceed the amount 
he or she is capable of taking by one of these ways. 

Sect. 3. The inventory required by law to be made by 
an executor or administrator, in addition to the matters now 
required to be stated therein, shall also state the value of 
each piece or parcel of real estate of which the deceased 
died possessed of or was in any way entitled, and the total 
value of the whole estate, real and personal ; which state- 
ment of the total value of said estate shall be conclusive 
upon all persons who shall claim any interest in such estate 
by descent or under the will of the deceased, by virtue of 



522 MISCELLANEOUS MATTER. 

this act, unless the same is changed as hereinafter provided. 
Upon a sworn petition of one or more persons interested in 
the estate as heirs or distributors, showing that such total 
value is too low or too high, the court shall appoint three 
disinterested persons to revalue the estate, who, being first 
sworn to make a just and true valuation thereof, shall re- 
value the same and make return of their valuation, which, 
unless set aside for fraud or mistake, shall be conclusive 
as to the rights of all persons claiming or to claim any 
interest in said estate by descent or under the will of the 
deceased. In all cases w^here a specific article or piece of 
real or personal property is given or devised by will, the 
value thereof may be inquired into in such way as the Pro- 
bate Court shall direct. 

Sect. 4. In the proof of heirship it shall not be necessary 
to show other than the heirs who will be entitled to share 
in the estate, taking into account the limitations contained 
in this act. Only such heirs or distributees as shall appear 
to be entitled to share in the estate need be notified of the 
final settlement by the executor or administrator. 

Sect. 5 . Before the final settlement of the estate, or with 
a view to making such settlement, the court shall find the 
total value of the estate, and who are the heirs or persons 
interested therein as heirs, legatees, devisees, or distributees, 
and the nature and amount of their respective interests, and 
may order the whole or any part of the real or personal 
estate, or both, to be sold, and the proceeds brought into 
court for distribution according to the rights of the parties, 
or may declare the rights and interests of the respective 
parties in the respective pieces and parcels of real estate, 
and may make any and all orders that may be necessary to 
carry into effect the provisions of this act. 

Sect. 6. Every gift, conveyance, transfer, or disposition 



INHERITANCES AND BEQUESTS. 523 

of any real or personal estate made with intention to defeat 
the operation of this act shall be void. 

Sect. 7. All acts or parts of acts inconsistent with the 
provisions of this act are hereby repealed.^ 



3. NEW YORK LAWS REGARDING COLLATER.\L INHERITANCES 
AND BEQUESTS. 

An Act to amend chapter four hundred and eighty-three of 
the laws of eighteen hundred and eighty-five, entitled 
" An act to tax gifts, legacies and collateral inheritances 
in certain cases." 

Passed June 25, 1887 ; three-fifths being present. 

The people of the State of New York represented in Senate 
and Assembly, do enact as follows : — 

Section i . Chapter four hundred and eighty-three of the laws 
of eighteen hundred and eighty-five, entitled "An act to tax gifts, 
legacies and collateral inheritances in certain cases," is hereby 
amended so as to read as follows : — 

§ I. After the passage of this act all property which shall 
pass by will or by the intestate laws of this state, from any per- 
son who may die seized or possessed of the same while a resident 
of this state, or if such decedent was not a resident of this state 
at the time of death, which property, or any part thereof, shall 
be within this state, or any interest therein, or income therefrom 
which shall be transferred by deed, grant, sale or gift, made or 
intended to fike effect in possession or enjoyment after the death 
of the grantor or bargainor, to any person or persons, or to any 
body politic or corporate, in trust or otherwise, or by reason 
whereof any person or body politic or corporate shall become 
beneficially entitled in possession or expectancy, to any property 
or to the income thereof, other than to or for the use of his or 

1 This is also quoted from Jacobson's " Higher Ground." 



524 MISCELLANEOUS MATTER. 

her father, mother, husband, wife, child, brother, sister, the wife 
or widow of a son, or the husband of a daughter, or any child or 
children adopted as such in conformity with the laws of the state 
of New York, or any person to whom the deceased for not less 
than ten years prior to his or her death stood in the mutually 
acknowledged relation of a parent, and any lineal descendant of 
such decedent born in lawful wedlock, or the societies, corpora- 
tions and institutions now exempted by law from taxation by 
reason whereof any such person or corporation shall become 
beneficially entitled, in possession or expectancy, to any such 
property or to the income thereof, shall be and is subject to a 
tax of five dollars on every hundred dollars of the clear market 
value of such property, and at and after the same rate for any 
less amount, to be paid to the treasurer of the proper county, and 
in the city and county of New York to the comptroller thereof, 
for the use of the state, and all administrators, executors and 
trustees shall be liable for any and all such taxes until the same 
shall have been paid as hereinafter directed, provided that an 
estate which may be valued at a less sum than five hundred dol- 
lars shall not be subject to such duty or tax. 

§ 2. When any grant, gift, legacy or succession upon which a 
tax is imposed by section first of this act, shall be an estate, in- 
come or interest for a term of years or for life, or determinable 
upon any future or contingent event, or shall be a remainder, 
reversion or other expectancy, real or personal, the entire prop- 
erty or fund by which such estate, income or interest is sup- 
ported, or of which it is a part, shall be appraised immediately 
after the death of the decedent, at what was the fair and clear 
market value thereof at the time of the death of the decedent, in 
the manner hereinafter provided, and the surrogate shall there- 
upon assess and determine the value of the estate, income or 
interest subject to said tax, in the manner recorded in section 
thirteen of this act, and the tax prescribed by this act shall be 
immediately due and payable to the treasurer of the proper 
county, and in the city or county of New York to the comptrol- 
ler thereof, and, together with the interest thereon, shall be and 
remain a lien on said property until the same is paid ; provided 



INHERITANCES AND BEQUESTS. 525 

that the person or persons, or body poUtic or corporate bene- 
ficially interested in the property chargeable with said tax, may 
elect not to pay the same until they shall come into the actual 
possession or enjoyment of such property, and in that case such 
person or persons or body politic or corporate, shall give a bond, 
to the people of the state of New York, in a penalty of three 
times the amount of the tax arising upon personal estate, with 
such sureties as the surrogate of the proper county may approve 
conditioned for the payment of said tax and interest thereon at 
such time or period as they or their representatives may come 
into the actual possession or enjoyment of such property, which 
bond shall be filed in the office of the surrogate of the proper 
county; provided further, that such person shall make a full 
verified return of such property to said surrogate, and file the 
same in his office within one year from the death of the decedent, 
and within that period enter into such security and renew the 
same every five years. 

§ 3. Whenever a decedent appoints or names one or more 
executors or trustees and makes a bequest or devise of property 
to them in lieu of their commissions or allowances, which other- 
wise would be liable to said tax, or appoints them his residuary 
legatees, and said bequest, devises or residuary legacies exceed 
what would be a reasonable compensation for their services, such 
excess shall be liable to said tax, and the surrogate's court hav- 
ing jurisdiction in the case shall fix such compensation. 

§ 4. All taxes imposed by this act unless otherwise herein 
provided for, shall be due and payable at the death of the dece- 
dent, and if the same are paid within eighteen months, no interest 
shall be charged and collected thereon, but if not so paid, interest 
at the rate of ten per cent, per annum shall be charged and col- 
lected from the time said tax accrued ; provided, that if said tax 
is paid within six months from the accruing thereof, a discount 
of five per cent, shall be allowed and deducted from said tax, and 
in all cases where the executors, administrators or trustees do 
not pay such tax within eighteen months from the death of the 
decedent, they shall be required to give a bond in the form and 



526 MISCELLANEOUS MATTER. 

to the effect prescribed in section two of this act for the pajTnent 
of said tax, together with interest. 

§ 5. The penalty often per cent, per annum imposed by sec- 
tion four hereof, for the non-payment of said tax, sliall not be 
charged where in cases by reason of claims made upon the 
estate, necessary litigation or other unavoidable cause of delay, 
the estate of any decedent, or a part thereof, cannot be settled 
at the end of eighteen months from the death of the decedent, 
and in such cases only six per cent, per annum shall be charged 
upon the said tax, from the expiration of said eighteen months 
until the cause of such delay is removed. 

§ 6. Any administrator, executor or trustee having in charge, 
or trust, any legacy or property for distribution, subject to the 
said tax, shall deduct the tax therefrom, or if the legacy or prop- 
erty be not money, he shall collect the tax thereon upon the 
appraised value thereof from the legatee or person entitled to 
such property, and he shall not deliver, or be compelled to de- 
liver, any specific legacy or property subject to tax to any person 
until he shall have collected the tax thereon ; and whenever any 
such legacy shall be charged upon or payable out of real estate, 
the heir or devisee before paying the same, shall deduct said tax 
therefrom, and pay the same to the executor, administrator or 
trustee, and the same shall remain a charge on such real estate 
until paid, and the payment thereof shall be enforced by the 
executor, administrator or trustee in the same manner that the 
payment of such legacy might be enforced ; if, however, such 
legacy be given in money to any person for a limited period, he 
shall retain the tax upon the whole amount, but if it be not in 
money, he shall make application to the court having jurisdiction 
of his accounts, to make an apportionment, if the case require it, 
of the sum to be paid into his hands by such legatees, and for 
such further order relative thereto as the case may require. 

§ 7. All executors, administrators, and trustees shall have full 
power to sell so much of the property of the decedent as will 
enable them to pay said tax, in the same manner as they may be 
enabled by law to do for the payment of debts of their testators 



INHERITANCES AND BEQUESTS. 527 

and intestates, and the amount of said tax shall be paid as here- 
inafter directed. 

§ 8. Every sum of money retained by an executor, administra- 
tor or trustee, or paid into his hands, for any tax on any property, 
shall be paid by him within thirty days thereafter, to the treasurer 
of the proper county, or in the city and county of New York, to 
the comptroller thereof, and the said treasurer or comptroller shall 
give, and every executor, administrator, or trustee shall take 
duplicate receipts from him of such payment, one of which 
receipts he shall immediately send to the comptroller of the 
state, whose duty it shall be to charge the treasurer or comp- 
troller so receiving the tax, with the amount thereof, and shall 
seal said receipt with the seal of his office, and countersign the 
same and return it to the executor, administrator or trustee, 
whereupon it shall be a proper voucher in the settlement of his 
accounts, but an executor, administrator or trustee shall not be 
entitled to credits in his accounts, nor be discharged from lia- 
bility for such tax, unless he shall produce a receipt so sealed 
and countersigned by the comptroller, or a copy thereof certified 
by him. 

§ 9. Whenever any of the real estate of which any decedent 
rray die seized shall pass to any body politic or corporate, or to 
any person or persons other than his or her father, mother, hus- 
band, wife, lawful issue, brother, sister, wife or widow of a son, 
or husband of a daughter, or child or children adopted by such 
decedent according to law, or any person to whom the deceased 
for not less than ten years prior to his or her death, stood in the 
mutually acknowledged relation of a parent, or in trust for them, 
or some of them, it shall be the duty of the executors, adminis- 
trators or trustees of such decedent, to give information thereof 
in writing to the treasurer or comptroller of the county where 
such real estate is situate, within six months after they undertake 
the execution of their respective duties, or if the fact be not known 
to them within that period, then within one month after the same 
shall have come to their knowledge. 

§ 10. Whenever any debts shall be proven against the estate 
of a decedent, after the payment of legacies or distribution of 



528 MISCELLANEOUS MATTER. 

property from which the said tax has been deducted, or upon 
which it has been paid, and a refund is made by the legatee, 
devisee, heir or next of kin, a proportion of the tax so paid shall 
be repaid to him by the executor, administrator or trustee, if the 
said tax has not been paid to the county treasurer, comptroller, 
or to the state treasurer, or by them if it has been so paid. 

§11. Whenever any foreign executor or administrator shall 
assign or transfer any stocks or loans in this state, standing in 
the name of a decedent, or in trust for a decedent, which shall be 
liable to the said tax, such tax shall be paid to the treasurer or 
comptroller of the proper county on the transfer thereof, other- 
wise the corporation permitting such transfer shall become liable 
to pay such tax, provided that such corporation had knowledge 
before such transfer that said stocks or loans are liable to said 
tax. 

§ 12. When any amount of said tax shall have been paid erro- 
neously to the state treasurer, it shall be lawful for him, on satis- 
factory proof rendered to the comptroller by said county treasurer 
or comptroller, of such erroneous payment, to refund and pay to 
the executor, administrator, person or persons who have paid any 
such tax in error, the amount of such tax so paid, provided that 
all such applications for the payment of such tax shall be made 
within five years from the date of such payment. 

§ 13. In order to fix the value of property of persons whose 
estates shall be subject to the payment of said tax, the surrogate, 
on the application of any interested party, or upon his own motion, 
shall appoint some competent person as appraiser as often as, and 
whenever occasion may require, whose duty it shall be forthwith 
to give such notice by mail to all persons known to have or claim 
an interest in such property, and to such persons as the surrogate 
may by order direct, of the time and place he will appraise such 
property; and, at such time and place, to appraise the same at 
its fair market value, and make a report thereof in writing to said 
surrogate, together with such other facts in relation thereto as 
said surrogate may by order require, to be filed in the ofiice of 
such surrogate ; and from this report the said surrogate shall 
forthwith assess and fix the then cash value of all estates, annul- 



INHERITANCES AND BEQUESTS. 529 

ties, and life estates or terms of years growing out of said estate, 
and the tax to which the same is hable, and shall immediately 
give notice thereof by mail to all parties known to be interested 
therein, and the value of every future or contingent or limited 
estate, income or interest shall, for the purposes of this act, be 
determined by the rule, method and standards of mortality and of 
value, which are employed by the superintendent of the insurance 
department in ascertaining the value of policies of life insurance 
and annuities, for the determination of the liabilities of life insur- 
ance companies, save that the rate of interest to be assessed in 
computing the present value of all future interests and contingen- 
cies shall be five per cent, per annum ; and the superintendent of 
the insurance department shall, on the apjDlication of any surro- 
gate, determine the value of such future or contingent or limited 
estate, income or interest, upon the facts contained in such 
report, and certify the same to the surrogate, and his certificate 
shall be conclusive evidence that the method of computations 
adopted therein is correct. Any person or persons dissatisfied 
with appraisement or assessment may appeal therefrom to the 
surrogate of the proper county within sixty days after the making 
and filing of such assessment, on paying or giving security ap- 
proved by the surrogate to pay all costs, together with whatever 
tax shall be fixed by said court. The said appraiser shall be 
paid by the county treasurer or comptroller out of any funds he 
may have in his hands on account of said tax, on the certificate 
of the surrogate, at the rate of three dollars per day for every day 
actually and necessarily employed in said appraisement, together 
with his actual and necessary travelling expenses. 

§ 14. Any appraiser appointed by virtue of this act who shall 
take any fee or reward from any executor, administrator, trustee, 
legatee, next of kin or heir of any decedent, or from any other 
person liable to pay said tax, or any portion thereof, shall be 
guilty of a misdemeanor, and upon conviction in any court hav- 
ing jurisdiction of misdemeanors, he shall be fined not less than 
two hundred and fifty dollars nor more than five hundred dollars, 
and imprisoned not exceeding ninty days, and in addition thereto 
the surrogate shall dismiss him from such service. 



530 MISCELLANEOUS MATTER. 

§ 15. The surrogate's court in the county in which the real 
property is situate of a decedent who was not a resident of the 
state, or in the county of which the decedent was a resident at 
the time of his death, shall have jurisdiction to hear and de- 
termine all questions in relation to the tax arising under the 
provisions of this act, and the surrogate first acquiring jurisdic- 
tion hereunder shall retain the same to the exclusion of every 
other. 

§ 16. If it shall appear to the surrogate's court that any tax 
accruing under this act has not been paid according to law, it 
shall issue a citation, citing the persons interested in the prop- 
erty liable to the tax to appear before the court on a day certain, 
not more than three months after the date of such citation, and 
show cause why said tax should not be paid. The service of 
such citation and the time, manner and proof thereof, and fees 
therefor, and the hearing and determination thereon, and the 
enforcement of the determination or decree shall conform to the 
provisions of the Code of Civil Procedure, for the service of cita- 
tions now issuing out of surrogates' courts, and the hearing and 
determination thereon and its enforcement. And the surrogate, 
or clerk of the surrogate's court, shall, upon the request of the 
district-attorney, treasurer of the county, or comptroller of the 
county of New York, furnish, without fee, one or more tran- 
scripts of such decree as provided in section twenty-five hundred 
and fifty-three of the Code of Civil Procedure, and the same 
shall be docketed and filed by the county clerk of any county in 
the state without fee, in the same manner, and with the same 
effect as provided by said section for filing and docketing tran- 
scripts of decrees of such courts. 

§ 17. Whenever the treasurer or comptroller of any county 
shall have reason to believe that any tax is due and unpaid under 
this act, after the refusal or neglect of the persons interested in 
the property liable to said tax, to pay the same, he shall notify 
the district attorney of the proper county, in writing, of such 
failure to pay such tax, and the district attorney so notified, if he 
have probable cause to believe a tax is due and unpaid, shall 
prosecute the proceeding in the surrogate's court in the proper 



INHERITANCES AND BEQUESTS. 531 

county, as provided in section sixteen of this act for the enforce- 
ment and collection of such tax. All costs awarded by such 
decree, that may be collected after the collection and payment of 
the tax, to the treasurer or comptroller of the proper county, may 
be retained by the district attorney, hereafter elected or ap- 
pointed, for his own use. 

§ 1 8. The surrogate and county clerk of each county shall, 
every three months, make a statement in writing to the county 
treasurer or comptroller of his county of the property from which, 
or the party from which, he has reason to believe a tax under this 
act is due and unpaid. 

§ 19. Whenever the surrogate of any county shall certify that 
there was probable cause for issuing a citation and taking the 
proceedings specified in section seventeen of this act, the state 
treasurer shall pay or allow to the treasurer or comptroller of 
any county all expenses incurred for services of citation and 
his other lawful disbursements that have not otherwise been 
paid. 

§ 20. The comptroller of the state shall furnish to each surro- 
gate a book in which he shall enter the returns made by ap- 
praisers, the cash value of annuities, life estates and terms of 
years and other property fixed by him, and the tax assessed 
thereon, and the amounts of any receipts for payments thereon 
filed wdth him, which books shall be kept in the office of the 
surrogate as a public record. 

§ 21. The treasurer of each county and the comptroller of the 
county of New York shall collect and pay the state treasurer all 
taxes that may be due and payable under this act, who shall give 
him a receipt therefor, of which collection and payment he shall 
make a report under oath to the comptroller on the first Monday 
in March and September of each year, stating for what estate 
paid, and in such form and containing such particulars as the 
comptroller may prescribe ; and for all such taxes collected by 
him and not paid to the state treasurer by the first day of Octo- 
ber and April of each year he shall pay interest at the rate of ten 
per cent, per annum. 

§ 22. The treasurer of each county and the comptroller of the 



532 MISCELLANEOUS MATTER. 

city and county of New York, shall be allowed to retain, on all 
taxes paid and accounted for by him each year, under this act, 
in addition to his salary or fees now allowed by law, five per 
cent, on the first fifty thousand dollars so paid and accounted for 
by him, three per cent, on the next fifty thousand dollars so paid 
and accounted for by him, and one per cent, on all additional 
sums so paid and accounted for by him. 

§ 23. Any person or body pohtic or corporate shall, upon 
payment of the sum of fifty cents, be entitled to a receipt from 
the county treasurer of any county or comptroller of the county of 
New York, or a copy of the receipt, at his option, that may have 
been given by said treasurer or comptroller for the payment of 
any tax under this act, to be sealed with the seal of his office, 
which receipt shall designate on what real property, if any, of 
which any decedent may have died seized, said tax has been 
paid, and by whom paid, and whether or not it is in fiill of said 
tax, and said receipt may be recorded in the clerk's office of 
the county in which said property is situate, in a book to be kept 
by said clerk for such purpose, which shall be labelled "collateral 
tax." 

§ 24. All taxes levied and collected under this act, shall be 
paid into the treasury of the state, for the uses of the state, and 
shall be applicable to the payment of the general expenses of the 
state government, and to such other purposes as the legislature 
may by law direct. 

§ 25. All acts or parts of acts inconsistent with the provisions 
of this act are hereby repealed. 

§ 26. This act shall take effect immediately. 



INDEX, 



INDEX 



A. 



Adams, Prof. Henry C, cited, 6, 91, 196, 
263. 

Administrative classification of taxes, 
76. 

Administrative machinery for the as- 
sessment and collection of taxes, 350. 

Alabama, statistics of, 408. See also 
tables of revenues and expenditures, 
valuation of property, rates of taxa- 
tion, and debts. 

Aliens, taxes on, 9. 

Allinson and Penrose, cited, 40, 45. 

Appeals, 369. 

Apportioned taxes, defined, 78. 

Arkansas, statistics of, 410. See also 
tables of revenues and expenditures, 
valuations of property, rates of taxa- 
tion, and debts. 

Armstrong, C. M., cited, 15, note. 

Assessment of taxes, in 1796, 124 ; ma- 
chinery for, in counties, 360 ; in cities, 

365. 
Athens, taxation in, 25, 26, 27. 
Atlanta, license taxes in, 205 ; statistics 

of, 476. See also comparative table, 

478. 

B. 

Back Bay lands of Massachusetts, 267. 

Baltimore, cost of collection of taxes in, 
91 ; increase in rate of taxation in, 
140 ; taxation in, 191 ; ground-rent 
system of, 266 ; statistics of, 469 ; table 
showing valuation of property, taxa- 



tion, etc., in. 480. See also compara- 
tive table, 478. 

Baltimore Tax Commission Report, 
cited, 141 ; quoted on discount for 
payment of taxes, 354. 

Banks, taxation of, in Maryland, 331 ; 
taxation of, in Ohio, 332. 

Belgium, cost of collection of taxes in, 90. 

Bemis, Dr. E. W., cited, iii. 

Benevolences, 22, note. 

Benevolent and educational institutions, 
taxation of, 345. 

Bequests, see Inheritances. 

Berlin, receipts of, 53. 

Board of equalization in Connecticut, 
140; in New York, 184; in Illinois, 
199. 

Bodin, Jean, cited, 34, 63. 

Boeckh, quoted on taxation in Athens, 
26; cited on same, 27, 28. 

Bonds and stocks, taxation of, in Mary- 
land, 332. 

Boston, license taxes in, 203 ; statistics 
of, 471 ; table showing valuation of 
property, taxation, etc., of, 485. See 
also comparative table, 478. 

Braunschweig-Wolfenbiittel, cited, 34. 

Business licenses, 203. 

Business taxes, 71, 321 ; classes of, 72; 
recommendations concerning, 323. 



C. 



California, statistics of, 411. See also 
tables of revenues and expenditures, 
valuations of property, rates of taxa- 
tion, and debts. 



536 



INDEX. 



Canard, quoted on taxes, 246. [205. | 

Charlotte (X. C), business licenses in, I 

Charleston (S. C), business licenses in, ' 
204; valuation of property in, 507. I 

Chesapeake and Ohio Canal, recom- \ 
mendations concerning, 385. j 

Chestertown (Md.), plan of rental of 
college lands at, 265. 

Chicago Law Times quoted, 518. 

Chicago, statistics of, 472 ; table show- 
ing valuation of property, taxation, 
etc., in, 488. See also comparative 
table, 478. 

Church buildings, taxation of, 344. 

Cicero, quoted on taxation, 29. 

Cincinnati, table showing valuation of 
property, taxes, etc., of, 490. 

Cities, increase of population in, com- 
pared with country, 142, 

City assessors, 142. 

Collateral inheritances, taxation of, in 
Maryland, 316; in New York and 
Pennsylvania, 317 ; law concerning 
taxation of, in New York, 523. 

Collection of taxes, 1796, 128 ; cost of, 
130. See also statistics of states. 

Colonial taxation, 105. 

Colorado, statistics of, 413. See also i 
tables of revenues and expenditures, 
valuations of property, rates of taxa- 
tion, and debts. | 

Columbia College, plan of, in rental of 
lands, 265. j 

Connecticut, taxation in, in 1796, 119, j 
122, 124, 128, 129, 130 ; during the i 
transition period, 133; taxation of; 
personal property in, 188 ; statistics \ 
of, 414. See also tables of revenues 
and expenditures, valuations of prop- 
erty, rates of taxation, and debts, and 
grand list of 1864-1885, 503. 

Connecticut Special Tax Commission 
Report, quoted, 133, 140, 188. 

Conscience money, 213. 

Constitutional provisions, remarks on, 
375 ; table of, opposite 396 ; addi- 
tional, 397 ; regarding state finance 



and taxation, 397 ; regarding munici- 
pal finance and taxation, 403. 

Cook County (111.), valuation of prop- 
erty in, 198. 

Cooley, Judge T. M., definition of 
taxes by, 4; quoted, 11, 14, 17, 19, 

23. 24. 
Corporations, recommendations of 

Maryland Tax Commission concerii- 

ing taxation of, 328. 
County assessors, 360. 
Custom duties, 74. 



D. 



Debts, state and municipal, constitu- 
tional provisions concerning, 510; 
statistical table showing, 513. 

Delaware, taxation in, in 1796, 1.22, 
126, 128, 130 ; statistics of, at present, 
415. See also tables of revenues and 
expenditures, valuations of property, 
rates of taxation, and debts. 

Digressive taxes, 77. 

Direct taxes, as defined by the Physio- 
crats, 64 ; by Leroy Beaulieu, 66, 76 ; 
by Prof. Knies, 67; by the author, 
69 ; sub-classes of, 71 : compared 
with indirect, 79; promote good 
citizenship, 87; combination of, with 
indirect favored, 88 ; cost of collec- 
tion, 90. 

Discounts for early payment of taxes, 

354- 
Domains and forests, revenue derived 

from, in European countries, 49, 50. 
Duties, in colonial days, 114. 



E. 



Educational and benevolent institu- 
tions, taxation of, 345. 

Egleston, Melville, cited, 112. 

England, gas-works, water-works, and 
street car lines in, 53; relation be- 
tween taxation and liberty in, 58; 
cost of collection of taxes in, 90. 



INDEX. 



537 



Ensley, Mr. Enoch, quoted, 218, note ; 
cited, 222, 7iote. 

Equalization, boards of, in New York, 
184; methods of, 185 ; of whom com- 
posed, 186; in Illinois, 199; method 
of, compared with that of New York, 
200. 

Executors and administrators, tax on, 
in Maryland, 317. 

Expenditures of state compared with 
federal and local expenditures, 253. 

Expenditures and receipts of cities, 469. 

Expenditures and receipts of states, 407. 

Expenditures and receipts of territories, 
454. 



F. 



Fawcett, 64; cited on income tax, 295. 

Federal income tax, returns of, 300. 

Federal interference in local taxation, 
225. 

Federal, state, and local bodies to be 
considered together, 244. 

Federal, state, and local expenditures 
compared, 253. 

Fees, defined, 74, 112. 

Floating capital, taxation of, 218 ; ben- 
efit of exemption of, from taxation, 
223. 

Florida, statistics of, 416, See also 
tables of revenues and expenditures, 
valuations of property, rates of taxa- 
tion, and debts, 

Foraker, Governor, quoted on taxation 
of personalty in Ohio, 155 ; on tax 
laws in Ohio, 156; on internal im- 
provements in Ohio, 387. 

Forest culture in the United States, 48. 

Forests and public domain, revenues 
from, 49, 50. 

France, cost of collection of taxes in, 
90. 

Franchise tax, defined, 73. 

Franklin, Benjamin, bequest of, 39. 

Fundamental principles of taxation, 
237. 



Gainful pursuits, revenues from, in 
European states, 50. 

Gardner, Mr. Henry B,, cited, 39, 44, 
141. 

Gas-works, in Paris, 52; in Berlin, 53; 
in Prussia, 53 ; in England, 53 ; profits 
from, 215 ; profitableness of, 270. 

George, Henry, views of, on taxation 
stated, 16, 62, 

Georgia, taxation of, in 1796, 120, 122, 
128, 129, 130; experience of, 160; 
present tax system of, 160; assess- 
ment of property in, 161 ; city and 
town property in, 164; taxation of 
notes, bonds, etc., in, 164 ; productive 
property of, 214; statistics of, 417. 
See also tables of revenues and ex- 
penditures, valuations of property, 
and debts. 

Goodnow, Prof. Frank J., 54. 

Govan, Hon. Geo. M., on taxation of 
railroads in Mississippi, 327. 

Greece, taxation in, 26. 

Green, J. R., quoted, 59, 60. 

Gross, Charles, Ph.D., quoted on taxa- 
tion of the Jews, 32. 

Ground-rent in Baltimore, 266. 



H. 



Haller, Karl Ludwig von, cited, 34, 

note. 
Hearth and window taxes, 43. 
Hewitt, Hon. A. S., message of, quoted, 

321. 
High licenses, 283. 
Hill, Governor, quoted on taxation in 

New York, 176, 178. 
Hills, Mr. Thos., quoted on discounts, 

355- 
Hitchcock, Prof. Henry, quoted, 376, 

377. 
Household goods, taxes on, 334, 
Huxley, Professor, quoted on taxation, 

16. 



538 



INDEX. 



Illinois, constitution of, cited, lo ; taxa- 
tion in, 192; cause of high taxes in, 
194 ; statistics of taxation and valua- 
tion in cities of, 195 ; in counties of, 
196; realty and personalty in, com- 
pared, 198 ; board of equalization in, 
199; productive property of, 214; 
liquor license in, 283 ; statistics of, 
418. See also tables of revenues and 
expenditures, valuations of property, 
rates of taxation, and debts. 

Illinois Bar Association, report of com- 
mittee of, quoted, 319, 515. 

Illinois Revenue Commission Report, 
quoted, 197 ; on equalization, 253, 
note; on assessment of property, 
351 ; on oaths, 352. 

Income taxes, 71, 287 ; position of, in 
a system of taxes, 287 ; equality of 
taxation impossible without, 287; 
fairness of, 288; objection to, 290; 
promote good government, 289 ; com- 
pared with taxation of personal prop- 
erty, 294 ; introduction into England, 
294 ; why federal income tax unsuc- 
cessful, 296 ; must be state, not mu- 
nicipal, 296; cost of collection of, 
296, note ; assessment of, 297 ; suffi- 
ciency of low, 300; in American 
states, 302 ; all income above certain 
moderate exemption subject to, 303 ; 
benefits of, to property owners, 304 ; 
progressive versus proportional, 305 ; 
favorable feeling regarding, 307; 
letters quoted concerning, 308, 309. 

Indiana, statistics of, 419. See also 
tables of revenues and expenditures, 
valuations of property, rates of taxa- 
tion, and debts. 

Indirect taxes, as defined by the Physi- 
ocrats, 64; by Leroy-Beaulieu, 66, 
76 ; by Prof. Knies, 67 ; by the au- 
thor, 69; origin of, 68; classes of, 
70. 73 1 compared with direct, 79 ; 
are chiefly taxes on commodities, 79 ; 



I violate principle of equality, 80 ; in- 
I duce pauperism, 83 ; obstruct trade, 
i 83 ; conduce to monopoly, 83 ; are 
I congenial to despodsm and aris- 
tocracy, 85 ; combmation of, with 
I direct favored, 88 ; cost of collection 
I of, 90. 
Industry, taxes on, 243. 
Inheritances and bequests, taxation of, 
j 312 ; exemption of certain amount, 
318 ; literature on, 320. note ; com- 
ments of Chicago Zaw 7/>7z^j-on,5i8; 
bill introduced into Illinois legisla- 
ture concerning, 519; New York law 
regarding, 523. 
Internal improvem.ents, recommenda- 
tion to repeal constitutional pro^^sion 
concerning, 384. See also under 
Constitudonal Provisions. 
Internal revenue taxes, 73. See also 

Indirect Taxes. 
" Instructions " of Georgia comptroller- 
general, quoted, 164, 165. 
Iowa, statistics of, 420. See also tables 
of revenues and expenditures, valua- 
tions of property, rates of taxation, 
and debts. 



J. 



Jacobson, quoted, 523. 
Japan, taxation in, 29. 
Jefferson, quoted on education, 346; 

on University of Virginia, 347. 
Jews, taxation of, in the Middle Ages, 

32, 33- 
Johns Hopkins University, reasons for 

not taxing, 347. 
Johnston, Alexander, cited, 228. 



K. 



Kansas, statistics of, 421. See also 
tables of revenues and expenditures, 
valuations of property, rates of taxa- 
tion, and debts. 



INDEX. 



539 



Kent County (Md.), assessment of 
property in, 191, 7iote. 

Kentucky, taxation in, in 1796, 120, 
127, 128, 129, 130; letter concerning 
poll tax in, 211; statistics of, 423. 
See also tables of revenues and 
expenditures of states, valuations 
of property, rates of taxation, and 
debts. 

King, Mr. Francis T., quoted on sav- 
ings banks in Baltimore, 342, 343. 

Knies, Professor, definition of taxes by, 
3 ; classification of taxes by, 67 ; 
quoted on fees, 74, note. 



Lamar, J. R., quoted on Georgia sys- 
tem of examining tax returns, 299. 

Land, taxes on, in 1796, 119. 

Leipzig, budget of, 52. 

Leroy-Beaulieu, Paul, definition of 
taxes by, 5 ; classification of taxes 
by, 66 ; definition of direct taxes by, 
76 ; cited, 52. 

Levermore, cited, 8 ; quoted, 37. 

Lewis, John L., legacy of, 40. 

License taxes, 203 ; evil influence of, 
206 ; on natural monopolies urged, 
208 ; on manufacture and sale of 
liquor, 280. 

Liquor, taxation of manufacture and 
sale of, 280. 

Literature of taxation, 94. 

Liturgies, 28. 

Local self-government, 380. 

Local expi'nditure, increase in, faster 
than that of state, 253. 

Local taxation, interference of federal 
government in matters concerning, 
225. 

Lotteries, 41, 113, 

Louisiana, taxation in, 138; statistics 
of, 424. See also tables of revenues 
and expenditures of states, valua- 
tions of property, rates of taxation, 
and debts. 



Lowell, James Russell, quoted on taxes 
in Austria, 43 ; quoted, 377. 

M. 

McComas, amendment to constitution 
proposed by, 392, 

McMaster, quoted, 114. 

Macon, poll tax in, 210. 

Maine, statistics of, 425. See also 
tables of receipts and expenditures, 
valuations of property, rates of taxa- 
tion, and debts. 

Maine, Sir Henry, quoted, 376, 377. 

Marshall, Chief Justice, quoted, 6, 

Martin, Luther, tax levied for use of, 5. 

Maryland, declaration of rights of, 
quoted, 10; early finances of, 46; 
taxation in, in 1796, 120, 121, 126, 
128, 129, 130; taxation during the 
transition period, 137; taxation of 
real and personal in, 189; hcense 
taxes in, 205 ; collateral inheritance 
tax in, 316; executors' and adminis- 
trators' tax in, 317 ; recommenda- 
tions concerning taxation of rail- 
roads in, 325; concerning taxation 
of corporations in, 328 ; concerning 
taxation of stocks and bonds in, 332; 
proposed amendments to constitu- 
tion of, by author, 394; statistics of, 
426. See also tables of revenues and 
expenditures of states, valuations of 
property, rates of taxation, and debts. 

Maryland Tax Commission Report, 
quoted, 38, 228 ; on taxation of stocks 
and bonds, 332 ; on t;?xation of church 
buildings, 344; on svstem of admin- 
istrative machinery for assessment of 
taxes, 360. 

Massachusetts, constitution of, cited, 
12, note; taxation in, in 1796, 119, 
121, 124, 128, 129, 130; taxation in 
the transition period, 138 , productive 
property in, 214; income taxes in, 
302, 303 ; statistics of, 427. See also 
tables of revenues and expenditure 



540 



INDEX. 



of states, valuations of property, 
rates of taxation, and debts. 

Massachusetts Bay Colony Records, 
quoted, 37. 

Massachusetts Tax Commission Re- 
port, quoted, 14, note ; quoted on dis- 
counts, 355, note. 

Meriwether, C, on royalty from phos- 
phate rock in South Carolina, 459. 

Michigan, liquor licenses in, 283 ; sta- 
tistics of, 429. See also tables of 
revenues and expenditures, valua- 
tions of property, rates of taxation, 
and debts. 

Middle Ages, revenues of the state in, 
30, 40, 88. 

Mill, John Stuart, quoted on taxation, 
237 ; on income tax, 295 ; on inheri- 
tances and bequests, 312. 

Minneapolis, liquor license in, 284. 

Minnesota, high license in, 284; sta- 
tistics of, 430. See also tables of 
revenues and expenditures, valua- 
tions of property, rates of taxation, 
and debts. 

Mississippi, tax of railroads in, 327 ; 
statistics of, 431. See also tables of 
revenues and expenditures, valua- 
tions of property^, rates of taxation, 
and debts. 

Missouri, high license in, 283 ; statistics 
of, 432. See also tables of revenues 
and expenditures, valuations of prop- 
erty, rates of taxation, and debts. 

Modified prohibition, 280. 

Montesquieu, quoted, 7, note, 34, 305. 

Montreal, business tax in, 323. 

Mortgages, etc., exemption of, from tax- 
ation, 335 ; benefits of exemption, 
338. 



N. 



Nashville (Tenn.), taxation in, 222. 

Natural monopolies, 269 ; defined, 269 ; 
profitableness of, 290 ; recommenda- 
tions concerning, 271. 



Nebraska, high license in, 284 ; statis- 
tics of, 433. See also tables of reve- 
nues and expenditures of states, valu- 
ations of property, rates of taxation, 
and debts. 

Nevada, statistics of, 434. See also 
revenues and expenditures of states, 
valuations of property, rates of taxa- 
tion, and debts. 

Newcomb, Prof. Simon, cited, 3S7. 

New Hampshire, taxation in, in 1796, 

119, 121, 124, 128, 130; during the 
transition period, 137; taxation of 
personal property in, 188 ; statistics 
of, 435. See also tables of receipts 
and expenditures of states, va-uations 
of property, rates of taxation, and 
debts. 

New Jersey, taxation of land in, in 1796, 

120, 122, 124, 128, 130; statistics of, 
436. See also tables of revenues 
and expenditures of states, valuations 
of property, rates of taxation, and 
debts. 

New York, early taxation in, 44 ; taxa- 
tion in, in 1796, 119, 121, 124, 128, 
130 ; comparison of taxation of realty 
and personalty in, 170; statistics of 
same, 180; comparison with other 
states, 182; board of equalization 
of, 184; productive property of, 214; 
trust funds of, 215 ; increase in state 
and local taxes of, 260 ; collateral in- 
heritance tax in, 317; statistics of, 
437 ; table showing rate of taxation, 
1816-1887, 497 ; table showing valua- 
tion of property and taxes from 1846- 
1887, 457 ; salt works of, 466 ; laws re- 
garding collateral inheritance tax in, 
523. See also general tables of reve- 
nues and expenditures, valuations of 
property, rates of taxation, and debts. 

New York and Brooklyn Bridge Street- 
Car Line, 48. 

New York City, cost of collection of 
taxes in, 92 ; statistics of, 473 ; table 
showing valuation of property and 



INDEX. 



541 



taxation of, 493. See also compara- 
tive table, 478. 

New York Tax Commission Report, 
quoted, 221. 

^^orth Carolina, taxation in, in 1796, 
119, 122, 127, 128, 129, 130; taxation 
of incomes in, 303 ; statistics of, 439 ; 
table showing receipts, etc., of 1868- 
1887,458. See also tables of revenues 
and expenditures, valuations of prop- 
erty, rates of taxation, and debts. 



O. 



Oaths, 162, 232. 

Occupation taxes, 203. 

Ohio, taxation in, in the transition pe- 
riod, 134 ; experience of, 146 ; con- 
stitutional provisions of, 147 ; real 
estate in, 148 ; taxation of personal 
estate in, 152; provisions for assess- 
ment of, 153 ; tax laws of, 156 ; sta- 
tistics of, 157 ; increase in state and 
local taxes of, 259; experience of, 
with public works, 387 ; general sta- 
tistics of, 440; grand duplicate of 
1800-1886, 455. See also tables of 
revenues and expenditures, valua- 
tions of property, rates of taxation, 
and debts. 

Onondaga Salt Springs Reservation, 
466. 

Oregon, statistics of, 441. See also 
tables of revenues and expenditures, 
valuations of property, rates of taxa- 
tion, and debts. 



P. 



Paris, revenues of, from productive 

property, 52. 
Patten, Dr, Samuel N., essay of, quoted 

on taxation, in Illinois, 192. 
Payment of taxes in instalments, 358 ; 

result of, in Georgia, 358 ; in Quebec, 

359. 



Pearce, James Alfred, letter of, on as- 
sessment of property in Kent County 
(Md.), 191, vote. 

Pennsylvania, early taxation in, 45 ; 
constitution of, quoted, 57 ; taxation 
in, in 1796, 120, 122, 126, 128, 129, 130 ; 
during the transition period, 138 ; 
high license in, 283 ; income tax in, 
302; collateral inheritance tax in, 
317; tax on corporations in, 328; 
constitution of, quoted, 393 ; statis- 
tics of, 442. See also general tables 
showing revenues and expenditures, 
valuations of property, rates of taxa- 
tion, and debts. 

Pennsylvania Tax Commission Report, 
quoted, 196, note. 

Penrose. See Allinson. 

Percentage taxes, defined, 78. 

Perry, Mr. A, J., quoted on taxation in 
Illinois, 92, note. 

Personal property, growth of, compared 
with real, 142 ; difficulty of discovery, 
144 ; taxation of, in Ohio, 152 ; pro- 
vision for assessment of, in Ohio, 
153; taxation of, in Georgia, 160; 
taxation of, in Wisconsin, 172 ; in 
West Virginia, 174; in New York, 
176; in New Hampshire, 188; in 
Connecticut, 188 ; in Maryland, 190 ; 
certain kinds of, to be exempt from 
taxation, 335. 

Personal taxes, 71. 

Perthes, cited, 31. 

Philadelphia, taxes in, 44; gas-works 
of, 48 ; high license in, 284; compar- 
ative table of receipts and expendi- 
tures, 475 ; table showing valuation 
of property and taxation, 1887, 494. 
See also comparative table, 478. 

Phosphate beds of South Carolina, 213, 
459- 

Phvsiocrats, classification of taxes by 
63. 

Poll taxes in ancient Greece, 27; in 
England, 42; defined, 71; in colo- 
nial days, III ; in United States at 



542 



INDEX. 



present, 209; in Georgia, 210; in 
Kentucky, 211, 

Productive property, revenues from, in 
South Carolina, 213 ; in New York, 
214 ; in Georgia, 214 ; in Illinois, 214 ; 
in Massachusetts, 214. See also do- 
mains, forests, gas-works, water- 
works, etc. ; also statistics concern- 
ing states and cities. 

Progressive taxes, 77. See also under 
Income, 305. 

Property taxes, 71 ; classes of. 72 ; in 
colonial days, 72 ; reason for equality 
in, 139. See also Personal and Real. 

Proportional taxes, 77. See also under 
Income, 305. 

Providence, valuation of property, tax- 
ation, etc., of, 495. 

Prussia, water-works and gas-works of, 
53 ; cost of collection of taxes in, 90 ; 
decentralization of administration in, 
2.S5, "ote. 



Quebec, quarterly payments of taxes in, 

359- 
Quit-rents, 112. 

R. 

Railroads, taxation of, in Germany, 
51 ; in Wisconsin, 170 ; remarks on 
taxation of, 324 ; gross, not net, reve- 
nues to be taxes, 324; recommenda- 
tions of ^Maryland Tax Commission 
concerning taxation of, 325 ; taxa- 
tion of, in Vermont, 326 ; in Missis- 
sippi, 327 ; valuation of property of, 
502. 

Rates of taxation in transition period, 
140; at present, 496. See also sta- 
tistics of states. 

Rau, Professor, classification of taxes 
by, 65. 

Record and Guide quoted, 492. 

Real estate, m New York, 176; taxation 
of, in Ohio, 248; reasons for taxa- 



tion of, 246; exemption of, from 
state taxation favored, 251 ; failure 
in equalization of state taxes on real 
estate, 251 ; plan for securing part 
of income from taxation of, to state 
and cities, 264; valuation of, in states, 
500 ; in cities, 480. See also Land, 
Property, and Personal Propert}', 
and statistics of states and cities. 

Real taxes, 71. 

Receipts, see Revenues ; also Expendi- 
tures. 

Referendum, 353. 

Regalia, 32. 

Regressive taxes, 77. 

Reitzenstein, Baron von, quoted, 231, 

Rents, tax on, 310. 

Revenues of the state in the Middle 
Ages, 30, 40 ; sources of, at present, 
other than taxation, 47; from do- 
mains and forests, 49, 50 ; from 
gainful pursuits, 50; from produc- 
tive property, 213, 214. 

Revenues and expenditures, of states, 
407 ; tabular statement of, opp. 452 ; 
of territories, 454 ; of cities, 469 ; tab- 
ular statement of, 478. 

Rhode Island, early taxation in, 44, 107, 
141; in 1796, 119, 121, 125, 128, 130; 
general statistics of, 443. See also 
tables of revenues and expenditures, 
valuations of property, rates of tax- 
i ation, and debts. 
! Road tax, 209. 

Rogers, Thorold, quoted on taxation, 
I 18. 

Rome, taxation in, 28, 29. 

Roscher, 36, 49, 53, 60, 85, 88, 90. 



Salt springs of New York, 466. 

Savannah, taxation of real and per- 
sonal in, 166-168 ; hquor licenses in, 
203 ; plan of disposing of real estate 
in, 264. 

Savings banks, taxation of, 340. 



INDEX. 



543 



Sawyer, Ho7i. Geo. T., cited, 138, 188. 

Scheel, Prof, von, on ownership of 
railroads by state, 51. 

Schonberg, cited, ']'j. 

Seckendorff, von, cited, 36. 

Seymour, Hon. Horatio, quoted on 
Erie Canal, 388. 

Sherman, Senator, classification of 
taxes by, 65. 

Smith, Adam, on taxes, 42 ; four canons 
of taxation, 240. 

South Carolina, taxation in, in 1796, 120, 
122, 128, 130 ; phosphate beds of, 213, 
459 ; general statistics of, 444. See 
also tables of revenues and expendi- 
tures of states, valuations of property, 
rates of taxation, and debts. 

Special assessments, 212. 

State expenditures, compared with 
federal and local, 254-260 ; remarks 
upon, 261 ; table showing, 452. See 
also statistics of states. 

Stocks and bonds, taxation of, in Mary- 
land, 332. 

Street-car Hues, revenue from, 48, 216; 
recommendations concerning man- 
agement of, 271 ; New York and 
New Orleans plan of management of, 
272 ; Baltimore plan of management 
of, 273. 

Sumner, Prof. W. G., cited, 306. 



T. 



Taxation, origin and growth of modern, 
25 ; in Greece and Rome, 26 ; in 
Japan, 29 ; in the Middle Ages, 30 ; 
early American views of, 44; rev- 
enues from other sources than, 47; 
importance of, 55 ; tendencies of, 57 ; 
and liberty, 58; and social reform, 
62 ; literature of, 94 ; colonial, 105 ; 
in 1796, 117; during the transition 
period, 131; rates of, during transi- 
tion period compared with present, 
140; dissatisfaction with old system 
early manifest, 141 ; of real estate, in 



Ohio, 148; of personal, in Ohio, 
152; in Georgia, 160; in Wisconsin, 
172 ; in West Virginia, 173 ; in New 
York, 176; of real and personal, 
compared, 179 ; in New Hampshire, 
189; in Illinois, 192; states not in- 
dependent in matters of, 217 ; of 
floating property, 218 ; benefits of 
exemption of, from, 223; interfer- 
ence of federal in local, 225 ; present 
methods of, needlessly demoralizing, 
229 ; principles for a new system of, 
237; four canons of, 240-242; of 
real estate, 246; exemption of real 
estate from state taxation, 251 ; of 
natural monopolies, 271 ; of man- 
ufacture and sale of intoxicating 
hquor, 280 ; of incomes, 287 ; of in- 
heritances and bequests, 312; of 
railroads, 324 ; of corporations, 328 ; 
of household goods, 334 ; of savings 
banks, 340 ; of churches, 344 ; of ed- 
ucational and benevolent institutions, 
345 ; constitutional provisions con- 
cerning, 375. 
Taxes, various definitions of, 3-6; au- 
thor's definition of, 6 ; in what paid, 8 ; 
one-sided transfer, 13; not debts, 18 ; 
power to impose legislative, 19 ; re- 
striction of power to impose, to pop- 
ular body, 20; representation not 
always accompany, 21 ; regular and 
voluntary contributions, 22 ; arbi- 
trary nature of definition of, 23; 
power to levy not be delegated, 24 ; 
in Greece and Rome, 26 ; in Japan, 
29 ; in Middle Ages, 30 ; subordinate 
in early budgets, 35 ; voluntary na- 
ture of, in earlier days, 37 ; paid at 
first by weak and defenceless, 42; 
in early history of America, 44; re- 
turns of, 55 ; classification of, 63 ; 
administrative classification of, 76; 
other modes of, 'j'j ; in the colonies, 
105; voluntary contributions early 
gave way to, 109; in 1796, 118; on 
land, 119; on other objects, 120; 



544 



INDEX. 



apportionment and collection of taxes 
in 1796, 123 ; taxes on real and per- 
sonal in force in the states, 140-192 ; 
on occupations, 203 ; on polls, 209 ; 
special, 212; levied by state, county 
and school district, 260; on man- 
ufacture and sale of intoxicating 
hquor, 280 ; on income, 287 ; on in- 
heritances and bequests, 312; on 
business, 324 ; on railroads, 324; on 
corporations, 328 ; on household 
goods, 334 ; on savings banks, 340 ; 
on churches, 344; on educational 
and benevolent institutions, 345. 

Ten Eyck, Henry James, cited, 306. 

Tennessee, taxation in, in 1796, 117, 
note; statistics of, 445. See also 
tables of revenues and expenditures 
of states, valuations of property, rates 
of taxation, and debts. 

Texas, statistics of, 446. See also tables 
of revenues and expenditures of 
states, valuations of property, rates 
of taxation, and debts. 

Thomas, Judge E. A., cited, 319, 7iote. 

Thucydides, 62. 

Titles, sale of, 41. 

Toronto, rental of land in, 265, 268. 

Transition period, 131. 

Trust funds, 215. 



U. 



United States, forest culture in, 48 ; tax- 
ation and liberty in, 61 ; cost of collec- 
tion of taxes in, 90 ; increase of federal 
state and local expenditure in, com- 
pared, 256. See also various states 
of the Union. 



Valuations of real and personal prop- 
erty in the various states, tabular 
statement of, 500. See also statistics 
of several states. 

Vermont, taxes in, in 1796, 119, 120, 
124, 128, 129, 130; taxation of rail- 



roads in, 326; taxation of corpora- 
tions in, 329, note ; statistics of, 448. 
See also tables showing revenues 
and expenditures of states, valua- 
tion of property, rates of taxation, 
and debts. 
Virginia, taxation in, in 1796, 120, 127, 
128, 129, 130; during the transition 
period, 137; income taxes in, 302; 
statistics of, 449. See also tables of 
revenues and expenditures of states, 
valuation of property, rates of taxa- 
tion, and debts. 

W. 

Wagner, Prof. Adolf, 50, 62, 74, note. 

Walker, Gen. Francis A., cited, 41, 78, 
132, 303- 

Washington, quoted on education, 346. 

Watches, returns on, in Philadelphia, 
167, note. 

Water-works, ownership of, 48 ; in 
England, 54. 

Wells, David A., quoted on oaths in 
tax assessments, 232. 

West Virginia, taxation in, 173 ; statis- 
tics of, 450. See also tables showing 
revenues and expenditures of states, 
valuations of property, rates of taxa- 
tion, and debts. 

West Virginia Tax Commission Report, 
cited, 137; quoted, 173, 233. 

Wilson, C. J., cited, 41, 42, 60, 69. 

Wisconsin, taxation of railroads in, 
170; property tax in, 172-, statistics 
of, 451. See also tables showing 
revenues and expenditures of states, 
valuations of property, rates of taxa- 
tion, and debts. 

Wolcott, Hon. Oliver, report of, cited, 
116 sqq. 

Worthington, Mr. T. K., quoted, 45; 
cited, 138, 303. 

Wright, Hon. Wm. A., quoted on 
work of grand juries in Georgia, 
300, note. 



